Exemption for compounded rubber upheld where vulcanised sheets were first formed before use in Hawai chappals.

Notification No. 152/87 was held applicable where compounded rubber was first converted into vulvcanised sheets classifiable under Chapter 40, and those sheets were then used to manufacture Hawai chappals under Chapter 64. The later use of the sheets in making footwear did not defeat exemption eligibility, because the notification conditions were satisfied at the stage of conversion into vulvcanised sheets. The Tribunal followed its earlier decision in the same respondents' case and applied that ratio to the facts before it. The respondents were entitled to the notification benefit, and the Revenue's appeals were rejected.

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Issues: Whether the respondents were entitled to the benefit of Notification No. 152/87 dated 25-5-1987 when compounded rubber was used in the manufacture of unvulcanised rubber sheets, which were later used in making Hawai chappals classified under Chapter 64.

Analysis: The applicable notification was held to be satisfied because the compounded rubber was first converted into vulcanised sheets falling under Chapter 40. The subsequent use of those sheets in the manufacture of Hawai chappals falling under Chapter 64 did not affect eligibility to the exemption. The Tribunal applied its earlier decision in the same respondents' case and followed that ratio to the facts before it.

Conclusion: The respondents were entitled to the benefit of the notification and the Revenue's appeals were rejected.

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