Exemption for factory inputs denied where M.S. castings used as containers fell within the notification's exclusion clause.

M.S. castings used as containers in the manufacture of calcium carbide were held to fall within the exclusion in Notification No. 217/86-C.E. because the Explanation denies exemption to machines, machinery, plant, equipment, apparatus, tools or appliances used for producing or processing goods. The castings were admitted to be used as containers, so they were not treated as exempt inputs within the notification. A cited precedent was distinguished on its facts because it concerned articles found not to be containers. The exemption was therefore denied and the issue was decided in favour of the Revenue and against the assessee.

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Issues: Whether M.S. castings used as containers in the manufacture of calcium carbide were eligible for exemption under Notification No. 217/86-C.E., or were excluded from the definition of "inputs" by the notification.

Analysis: Notification No. 217/86-C.E. grants exemption to specified inputs manufactured in a factory and used within the factory in or in relation to manufacture of final products. Its Explanation expressly excludes machines, machinery, plant, equipment, apparatus, tools or appliances used for producing or processing goods. The M.S. castings were admitted to be used as containers and were therefore not merely consumable inputs in the sense contemplated by the notification. The cited precedent concerned articles found not to be containers on its facts and did not assist the respondent.

Conclusion: The M.S. castings fell within the exclusion clause of the notification and were not entitled to the exemption. The issue is decided in favour of the Revenue and against the assessee.

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