Per T.K. Jayaraman : The Revenue has filed this appeal against the Order-in-Original No. 12/99 dated 1.6.1999 passed by the Commissioner of Central Excise, Chennai.

2. The Respondents manufactured and diverted some quantity of Iron Steel castings and other items of Iron Steel for captive consumption without payment of duty availing the exemption provided under Notification No. 67/95 dated 16.3.95 for manufacture of certain capital goods for use in their factory. They had also availed the benefit of Notification No. 67/95-CE on these capital goods which were used within the factory. The Revenue took a stand that in terms of proviso clause of Notification No. 67/95-CE dated 16.3.95 exemption under the notification would not be available to such captive consumption because the final products made out of such captively consumed intermediate foods were not cleared on payment of duty but installed and used as capital goods within the factory. In other words, the goods manufactured out of captively consumed intermediate goods were further consumed captively within the factory rather than being cleared by payment of duty. The Original Authority held that the Revenue's interpretation of the Notification is not correct. According to the Original Authority, the proviso clause of Notification No. 67/95-CE dated 16.3.95 covers only cases where the final products are cleared for home consumption and not case where the final products were captively consumed. In the impugned order, the Original authority has dropped the proceedings. The Revenue has come in appeal against the impugned order on the ground that there is nothing in the proviso or elsewhere in the notification to draw the distinction between the goods used captively or cleared within the factory. The Commissioner has therefore erred in taking a view that the proviso is attracted only where the final products are exempted and cleared outside the factory and not applicable in the present case as the final exempted capital goods are used only captively.

3.Shri L.Narasimha Murthy, learned SDR appeared for the Revenue and Shri M.S. Nagaraj Shri T.R. Sastry, learned Advocates appeared on behalf of the Respondents.

4. The learned Advocate urged that the interpretation of the notification by the adjudicating authority is in order and the grounds of the appeal of the Revenue have no merit. He relied on a large number of case laws. He brought to our notice the Tribunal's decision in the case of Rashtriya Ispat Nigam Ltd. vs CCE, Visakhapatnam 2002 (53) RLT 305 (CEGAT-Ban.)=2002 (150) ELT 743 (Tri.-Bang.) wherein it was held that the benefit of Notification No. 67/95-CE is available to coal tar pitch used in the manufacture of 'dolomite bricks' which is further used in relation to manufacture of final productsIn the case of Bharat Forge Ltd. vs CCE, Pune-III 2003 (59) RLT 807 (CESTAT-Mum.)=2004 (165) ELT 339 (Tri.-Mumbai), it has been held that even if the intermediate product is exempt from payment of duty, as long as the final products in which the intermediate products are captively consumed carry duty and cleared on payment of duty then Cenvat credit is admissible on the inputs, machinery, goods used in the manufacture of exempted products. This decision was rendered while interpreting Notification No. 67/95. The Tribunal relied on Board's Circular dated 26.9.2002 [reported in 2002 (52) RLT M111]. The Supreme Court in Escorts Ltd. vs CCE, Delhi 2004 (96) ECC 1 (SC) while interpreting the similar Notification No. 217/86-CE dt. 2.4.86 has held that so long as duty is paid on the final product, the mere fact that duty was not paid on the intermediate product would not disentitle the manufacturer from the benefit of Notification No. 217/86-CE dt. 2.4.1986. The Supreme Court in the case of Collector of Central Excise, New Delhi vs Hindustan Sanitaryware Industries 2002 (52) RLT 384 (SC)=2002 (145) ELT 3 (SC) held that Plaster of paris used in making of moulds which are in turn used