Exemption for compounded rubber used in Chapter 40 goods upheld despite final product classification under Chapter 85.

Compounded rubber captively consumed in making rubber plates and sheets was held eligible for exemption under Notification No. 16/94 as amended by Notification No. 74/94, because the notification required use of the compounded rubber in the manufacture of goods falling within Chapter 40. The department's objection that the end product, rubberised cylinders, fell under Chapter 85 was not accepted, since the Tribunal followed its earlier view that the relevant use was in the manufacture of rubber sheets and strips. The exemption benefit was available to the assessee.

---

---

Issues: Whether compounded rubber captively consumed in the manufacture of rubber plates and sheets, which were in turn used in the manufacture of rubberised cylinders, was eligible for the benefit of Notification No. 16/94 as amended by Notification No. 74/94.

Analysis: The condition in serial No. 6 of the table to the notification required that the compounded rubber be used in the manufacture of goods falling within Chapter 40. The departmental objection was that the final product, rubberised cylinders, fell under Chapter 85 and therefore the condition was not satisfied. The Tribunal noted that in earlier decisions on the same issue it had held the notification benefit to be available because the compounded rubber was used in the manufacture of rubber sheets and strips.

Conclusion: The exemption benefit was available to the assessee.

---