2003 (11) TMI 68

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....l, 1986 for the period 1986-1995. The notification in so far as it is relevant reads as follows : "The Central Government hereby exempts goods specified in column (2) of the Table hereto annexed (hereinafter referred to as 'inputs') manufactured in a factory and used within the factory of production, in or in relation to the manufacture of final products specified in column (3) of the said Table, from the whole of the duty of excise leviable thereon which is specified in the Schedule to the Central Excise Tariff Act, 1985 (5 of 1986); Provided that nothing contained in this notification shall apply to inputs used in or in relation to the manufacture of final products which are exempt from the whole of the duty of excise leviable th....

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.... 1997 (91) E.L.T. 34 and CCE v. Rajasthan State Chemical Works - 1991 (55) E.L.T. 444, to contend that the goods in question form an integral part of the entire production chain essential for the manufacture of the final products and that their use constituted an activity 'in relation' to the manufacture of the final products. 4.The respondent on the other hand has submitted that the exclusion clause which specifically uses the phrase "used for producing or processing of any goods or for bringing about any change in any substance in or in relation to the manufacture of the final products" serves to draw a distinction between different varieties of capital goods. According to the respondent, the exclusion clause applies only to production....

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....ed by the description of 'inputs' in the Table to the Notification, is, as already noted, undisputed. The only question, therefore, is as to the scope of the exclusion under the Explanation. The phrase "in or in relation to the manufacture of the final products" is common to both the exemption and the exclusion. All the decisions cited by the appellant relate to the meaning of this phrase. Reference to them was unnecessary since there is no dispute that the items in question are inputs and covered by this common phrase. The difference between the exemption and the exclusion lies in the phrases "used for producing or processing of any goods" and "goods for bringing about any change in any substance" occurring only in the exclusion. These ope....