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Issues: Whether gauges manufactured and used within the factory for checking and ensuring specifications of the final products were excluded from the benefit of Notification No. 217/86-C.E. as apparatus, tools or appliances used for producing or processing goods in relation to manufacture.
Analysis: The gauges were admitted to be used in relation to the manufacture of the final products and were employed to check and modify the production process so that the goods conformed to required specifications. The exclusion in the notification covered machines, machinery, plant, equipment, apparatus, tools or appliances used for producing or processing goods, and was not limited only to items that brought about a change in substance. Since the gauges were apparatus or tools used for processing the goods in the course of manufacture, they fell within the excluded category. The reasoning was consistent with the Tribunal's later view that items used for processing goods in relation to manufacture are outside the coverage of the notification.
Conclusion: The gauges were not eligible for the benefit of Notification No. 217/86-C.E. and the assessee's claim was rejected.
Ratio Decidendi: Instruments or equipment used for producing or processing goods in relation to manufacture fall within the exclusion clause of Notification No. 217/86-C.E., even if they do not themselves bring about a change in substance.
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