Judgment:
1. The respondents herein, an 100% Export Oriented Unit for manufacture and export of agro based products i.e. fresh button mushrooms, process button mushroom, pickles etc., had applied to Asstt. Commissioner of Central Excise for issue of CT. 3 certificate for obtaining certain indigenous equipment/material for the production of mushrooms, availing exemption under Notification No. 1/95. The Asstt. Commissioner held that certain products were not covered under any of the items mentioned in the Annexure appended to the Notification. The assessee filed an appeal before the Commissioner (Appeals) who held that - (1) Fibre woven reinforced plastic sheets to cover the mushroom bags, (4) Cold insulation materials, were covered under the Notification as capital goods and spares thereof and consumables. Hence this appeal by the Revenue.
2. We have heard both sides. Notification No. 1/95 grants exemption to excisable goods specified in Annexure I to the Notification when brought in connection with the manufacture and packaging of articles into a 100% export oriented undertaking. The Annexure covers capital goods, spares, material handling equipments, raw materials, components, consumables, packaging materials etc. The item at Sr. No. 1 is used to cover the mushroom bags to keep the micro environment CO2 above 10,000 ppm which is necessary because the concentration of below 2000 ppm reverses the entire metabolic activity and starts the formation of mushroom at the wrong time.
In other words, it is used to prevent the escape of CO2 which is developed by growing of mycelium. The item at Sr. No. (2) is to insulate the mushroom production room in which the temperature has to be maintained between 18 to 24 without which the mushroom production is not possible. The item at Sr. No. (3) is used for insulating the steam piping which is laid from the boiler to the different usage points so as to prevent the ambient condition affecting the quality of the steam. The item at Sr. No. (4) is also used for insulation so as to prevent loss of chilled water temperature required for maintaining the low temperature for growth of mushroom. From the use of the above items, it is clear that they are in the nature of capital goods, components and consumables and would hence be covered by Annexure 1 to the Notification. In the appeal memorandum, the Revenue has not adduced any reasons for supporting its contention that the 4 items in dispute cannot be treated as capital goods or components or consumables. Since the items in question are covered by Annexure 1 to Notification 1/95 as understood from their use, in the manufacture of export products, we hold that there is no ground to interfere with the impugned order with which we agree and accordingly uphold the same and reject the appeal.