COMMISSIONER OF CUSTOMS Vs. HINDUSTAN LEVER LTD.

JUDGEMENT

(1.) THE short issue arising from this appeal of the Revenue is whether the goods imported by the respondents and cleared under Bill of Entry dated 10 -12 -90 were eligible for the benefit of Notification No. 217/86 -C.E. According to the appellant, the Notification is not applicable to imported inputs inasmuch as it extended the benefit of exemption to goods "manufactured in a factory and used within the factory of production". Ld. SDR has reiterated this position. On the other hand, ld. Consultant for the respondents would rely on the Supreme Court's decision in Thermax Private Ltd. v. Collector of Customs, to argue that whether the inputs are imported or manufactured in India makes no difference for the above Notification. Ld. Counsel has claimed support from Paragraph 11 of the Supreme Court's judgment, which reads as under :

(2.) LD . counsel points out that the above view was reaffirmed in Hyderabad Industries Ltd. v. UOI, , by a Constitution Bench of the Supreme Court.

(3.) AFTER giving careful consideration to the rival arguments, we are unable to accept the logic presented by learned Counsel. In the case of Thermax Pvt. Ltd. (supra), the issue which arose for consideration of the Apex Court was whether the benefit of Notification No. 63/85 -C.E., dated 17 -3 -85 (which laid down effective rates of Basic Excise Duty for various goods (specified therein) was available to certain goods (specified in the said Notification) imported by the assessee in so far as Countervailing Duty (CVD) was concerned. Their lordships held that CVD on the imported goods should be equivalent to the BED payable on like goods by an Indian manufacturer under Section 3 of the Central Excise Act read with relevant exemption Notification. The short question before us is whether the benefit of exemption under Notification No. 217/86 -C.E. was available to the respondents in respect of the input imported by them. This notification, unlike the one considered by the Apex Court, is a Notification granting exemption to inputs manufactured in a factory and captively consumed in the manufacture of final product in the same factory. The goods in question were not manufactured in the respondents' factory. They were imported and used in the factory for the manufacture of final product. Such use is not captive consumption. Notification No. 217/86 -C.E. is applicable only to inputs manufactured and captively consumed in a factory. Hence it is not applicable to the subject goods. The benefit of the Notification was wrongly extended to the respondents by the lower appellate authority.