Per P.S. Bajaj:

This appeal has been filed by the appellants against the order in original dated 27.1.2000 (wrongly described as order in appeal in the memo of appeal) passed by the Commissioner of Central Excise vide which he had confirmed the duty demand of Rs. 36,46,103/- and imposed penalty of Rs. 2 lac on them.

2. The facts giving rise to this appeal may briefly be stated as under:

3. The appellants are engaged in the manufacture of TV Glass Shells of 14" and 17 " classifiable under Sub-Heading 7008.20 of the CETA and during the manufacture of that product, intermediate goods, namely, glass panels, glass funnels and glass necks were also produced by them during the period 1.3.99 to 2 8.9.99 from the various raw materials including neck tubes etc. These intermediate goods were used captively by them in the manufacture of their final product i.e. TV glass shells. They availed benefit of Notification No. 67/95-CE dated 16.3.95 in respect of these goods. On 9.9.99 the Preventive party of Central Excise paid surprise visit to their factory premises and during checking of the records, it revealed that they had cleared their final product, TV glass shells to M/s. Samtel India Ltd. against CT-2 certificates at nil rate of duty under Notification No. 47/94-CE (NT) dated 22.9.94. They, therefore, could not avail the benefit of Notification No. 67/95-CE dated 16.3.95 in respect of the intermediate goods i.e. glass panels, glass funnels and glass necks, for having cleared the final product (TV glass shells) at nil rate of duty under Notification No. 47/94. They accordingly were served with a show cause notice dated 1.10.99 for payment of duty amount of Rs. 36,46,103/- on the intermediate goods i.e. glass panels, glass funnels and glass necks, captively used for the manufacture of final product during the period 1.3.99 to 28.9.99 and penalty was also proposed to be imposed on them. They, however, contested the correctness of that notice by alleging that the clearances of their final product to M/s. Samtel India Ltd. under CT-2 certificate who in turn exported the same under Rule 13 of the Rules, could not be treated as clearances exempt from payment of duty or chargeable to nil rate of duty for denying them the benefit of Notification No. 67/95. But the adjudicating authority, namely, Commissioner, did not agree with their contention and accordingly confirmed the duty demand of the amount mentioned above and as indicted in the show cause notice and also imposed penalty of Rs. 2 lac on them through the impugned order.

4. The appellants have come up in appeal against the above said impugned order of the Commissioner before the Tribunal.

5. The facts are not much in dispute. Admittedly the appellants are engaged in the manufacture of TV glass shells of 14" and 17" classifiable under Sub-Heading No. 7008.20 of the CETA. During the manufacture of their final product, they produced intermediate goods, namely, glass panels, glass funnels and glass necks from various raw materials and captively consumed for the manufacture of the TV glass shells. It also remains undisputed that the TV glass shells were cleared by them to M/s. Samtel India Ltd. against CT-2 certificate at nil rate of duty under Notification No. 47/94-CE (NT) dated 22.9.94 issued by the Government, who in turn exported the same under Rule 13 of the Central Excise Rules.

6. Notification No. 67/95-CE dated 16.3.95 provides exemption to all capital goods and inputs if captively consumed within the factory of production. This notification had been issued by the Government in exercise of powers conferred under sub-section (1) of Section 5A of the Central Excise Act. However, proviso appended to this Notifications enacts that nothing contained in the notification shall apply to inputs used in or in relation to the manufacture of final product (other than those cleared to a unit in free trade zone or to an 100% exported oriented undertaking) which are exempt from the whole of duty of e