CIRCULAR No. 512/8/2000-CX Dated 1Oth February, 2000
Subject: Exemption from the Excise Duty to parts failing under any Chapter of goods failing under heading No.86.01 to 86.06 when used within the factory in the manufacture of goods failing under heading 86.01 to 86.06 .
Some doubts have been expressed whether parts failing under Chapters other than 86 of
goods failing under heading 86.01 to 86.06 when used within the factory in the
manufacture of goods failing under heading 86.01 to 86.06 will be eligible for the
exemption under Notification No.5 / 99-CE dated 28.2.99 (SI.No.266).
2. As far as classification of the goods falling under Chapter 86 is concerned, it
will be governed by notes (2) & (3) of Section XVII and for the classification
purposes the goods excluded by these notes will not be classifiable as parts under
Chapter 86. However, the notification No.8/96 dated 23.7.96 and subsequent
notification No.4/97-CE, No.5/98-CE and the present notification No.5/99-CE
exempts parts failing under any chapter of goods failing under heading No.86.01 to
86.06 used within the factory of production in the manufacture of goods failing under
heading No.86.01 to 86.06. In view of this specific provision, the goods failing under
Chapters other than 86, but being parts of goods falling under heading No.86.01 to
86.06 will also be covered by these notifications subject to fulfillment of other
conditions prescribed in the said notifications. For example, IC Engines and DG Sets /
Power Packs may be classifiable under Chapter 84 & 85 respectively, but when these are
used as parts of diesel locomotive failing under heading No. 86.02, these will be
covered by notification No.5/99-CE dated 28.2.99 (SI.No.266) subject to fulfillment
of other conditions.
3. This clarification is effective from 23.7.96 since when the exemption available
only to parts failing under Chapter 86 was expanded to cover parts failing under any
Chapter of goods failing under heading 86.01 to 86.06.
4. The Trade and Field formations may be informed accordingly.
5. Receipt of this Circular may please be acknowledged.
Sd / -
(S.C. Bhatia)
Under Secretary to the Govt. of India
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