Duty liability on sub-assemblies captively used in the manufacture of auto-electrical parts which are cleared at nil rate of duty for manufacture of tractors of PTO HP not exceeding 25 under Notification No. 239/86-C.E., dated 3-4-1986

Clarification on Duty Exemption for Sub-Assemblies in Auto-Electrical Parts Manufacturing Under Notification No. 239/86-C.E.

The circular addresses the duty liability on sub-assemblies used in manufacturing auto-electrical parts, which are cleared at a nil duty rate for tractors with power take-off horsepower not exceeding 25, under Notification No. 239/86-C.E. The Board clarifies that while finished auto-electrical components are exempt from duty, sub-assemblies used within the factory for producing these components should also qualify for exemption if they meet the notification's conditions, including end-use verification. This clarification aims to ensure consistent application of the exemption across all relevant components under the specified chapters of the Central Excise Tariff.