Exemption under Notification 217/86-C.E. denied for gauzes treated as appliances used in making motor vehicle parts.

Gauzes manufactured by the assessee were considered ineligible for the benefit of Notification No. 217/86-C.E. because they were treated as appliances used in producing motor vehicle parts. The Tribunal applied its earlier view that the notification's exclusion also extends to appliances used for producing intermediate goods in or in relation to the manufacture of final products. On that basis, the gauzes were not covered as qualifying inputs under the exemption. The result was that the notification benefit was denied and the appeal failed.

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Issues: Eligibility of gauzes manufactured by the assessee for the benefit of Notification No. 217/86-C.E. dated 02-04-1986, and whether they were covered as inputs under the notification.

Analysis: The Tribunal followed its earlier decision holding that the gauze was an appliance used for producing motor vehicle parts. It noted that the exclusion clause in the notification also operated where the appliance was used for producing intermediate goods in or in relation to the manufacture of final products. On that reasoning, the gauzes did not qualify as inputs for the exemption.

Conclusion: The benefit of Notification No. 217/86-C.E. was not available and the appeal failed.

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