Exemption notification on winding wires upheld where intermediate processing did not sever duty-paid input linkage.

Winding wires made from copper wire rods were held eligible for Notification No. 47/84-C.E. because the specified input had effectively suffered the required duty, including where wire bars were first converted into wire rods before use in the final product. The existence of an intermediate manufacturing stage did not break the chain between the duty-paid input and the exempted goods. The settled principle was also applied that goods exempted from duty, or cleared on a nil duty basis, can satisfy a notification condition requiring prior payment of appropriate duty. On that basis, the exemption was upheld and the Revenue challenge failed.

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Issues: Whether winding wires of copper manufactured from wire rods were entitled to the benefit of Notification No. 47/84-C.E. dated 01-03-1984, and whether nil payment of duty on the wire rods could satisfy the notification condition requiring prior payment of duty.

Analysis: The notification granted concessional duty to winding wires made from copper wire rods on which appropriate excise duty or additional customs duty had already been paid. The respondents' material showed that wire bars had been cleared on payment of customs duty and were processed into wire rods, which were then used in the manufacture of winding wires. The existence of an intermediate product in the course of manufacture did not break the link between the wire rods and the finished winding wires. The Tribunal also accepted the settled position that goods exempted from duty are to be treated as duty paid for the purpose of such exemption conditions.

Conclusion: The benefit of the notification was rightly allowed to the respondents, and the Revenue's challenge failed.

Final Conclusion: The order granting the exemption was upheld and the Revenue appeal was rejected.

Ratio Decidendi: For the purpose of an exemption notification, manufacture through an intermediate product does not negate the use of the specified input, and exempted or nil-rated goods may satisfy a condition requiring prior payment of appropriate duty.

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