Exemption for inputs used in original-equipment sub-assemblies denied where relief applied only to the finished goods supplied.

Exemption under Notification No. 239/86 and the Chapter X procedure was considered in relation to inputs used to manufacture sub-assemblies such as motors, starters and wiper motors supplied as original equipment to motor vehicle and tractor manufacturers. The notification was treated as applying only to the finished sub-assemblies actually cleared as original equipment, not to the upstream inputs consumed in producing those sub-assemblies. The facts were regarded as identical to an earlier Tribunal ruling, and the same ratio was applied, resulting in rejection of exemption on the inputs.

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Issues: Whether exemption under Notification No. 239/86 dated 1-3-86 and Chapter X procedure was available to inputs used in the manufacture of sub-assemblies such as motors, starters and wiper motors, when those sub-assemblies alone were supplied as original equipment to manufacturers of motor vehicles and tractors.

Analysis: The exemption was claimed not for the sub-assemblies cleared as original equipment, but for the inputs procured from other manufacturers and consumed in making those sub-assemblies. The notification was found to apply only to the product actually cleared as original equipment to tractor and motor vehicle manufacturers, and not to inputs used upstream in producing such original equipment. The facts were treated as identical to the earlier Tribunal decision relied upon, and the same ratio was applied.

Conclusion: The exemption was not available on the inputs used to manufacture the sub-assemblies, and the appeal was held to be without merit.

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