Judgment:
1. Question involved in this appeal is whether the benefit of Notification No. 217/86-C.E. can be extended to Polypropylene fabric which is used, as the Revenue alleges, in the manufacture of filter bags captively and those filter bags are used in gravity pond Alteration system in manufacture of dutiable final product, sugar.
Contention of the appellants herein is that the filter bags are intermediate products and it is the polypropylene fabric which has been brought after payment of duty and their final product is sugar which is admittedly dutiable. Therefore, the benefit of Notification No.217/86-C.E. is clearly admissible irrespective of the fact that in the process of use of such fabric a certain shape is given to the fabric described by the Revenue as filter bags. In this connection, learned Advocate, Shri G. Shiv Das submits that an identical issue has been decided in their favour in the case of Upper Doab Sugar Mills v. C.C.E.reported by Final Order No. 188/99-D, dated 5-2-1999 1999 (111) E.L.T.262 (T).
2. Learned Advocate also submits that even if it is treated as a part of gravity pond filteration system even the filter bags will not be covered by the exclusion clause of Notification No. 217/86-C.E. in view of Tribunal's Larger Bench judgment in the case of Union Carbide reported in 1996 (86) E.L.T. 613.
3. Looked at from any angle submits the learned Advocate, the benefit of Notification No. 217/86-C.E. cannot be denied and therefore, the appeal be allowed with consequential relief to the appellants after setting aside the impugned order.
4. Opposing the contention, learned JDR Shri R.S. Sangia submits that the filter bags shaped by the appellants is, no doubt, a part of gravity pond filter system but the parts are also an equipment in his view. He, therefore, submits that the benefit of Notification 217/86-C.E. would not be available to the appellants because equipments and apparatus are specifically excluded from the scope of the benefit of the said Notification. He cites in support a CEGAT judgment in the case of Gwalior Sugar Company Ltd. v. C.C.E. reported in 1992 (59) E.L.T. 482 which is directly in his favour on this point.
5. We have carefully considered the pleas advanced from both sides. As regards the reliance placed by the learned JDR on Gwalior Sugar Company Ltd., we observe that this is no longer a good law in view of Larger Bench judgment in the case of Union Carbide, supra. We, therefore, hold following the judgment of the Tribunal in the case of Upper Doab Sugar Mills and the Larger Bench decision in the case of Union Carbide Ltd. that the benefit of Notification No. 217/86-C.E. cannot be denied to the Polypropylene fabric brought after payment of duty and utilised in the manufacture of dutiable final product, sugar. Hence, we set aside the impugned orders and allow the appeals with consequential relief to the appellants.