Inter-factory exemption for excisable goods requires proof of actual use and compliance with Chapter X procedure.

Exemption under Notification No. 118/75-C.E. for refractory materials moved from one factory to other factories of the same manufacturer depended on compliance with Chapter X procedure and proof of actual inter-factory use. The record did not establish that the goods removed from the Taloja factory were in fact used in the other factories, and the assessee produced no material on that factual issue. Earlier observations relied on by the assessee were treated as obiter because duty liability was not then in issue. On those facts, there was no basis to interfere with the appellate order or direct remand, and the exemption claim failed.

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Issues: Whether the appellant was entitled to the benefit of Notification No. 118/75-C.E. in respect of refractory materials manufactured at one factory and claimed to have been used in other factories, where the prescribed Chapter X procedure was not followed and actual use was not established.

Analysis: The notification granted exemption to goods manufactured in one factory for use in the same or another factory of the same manufacturer, subject to compliance with the procedure in Chapter X of the Central Excise Rules. The record did not show that the refractory materials removed from the Taloja factory were in fact used in the other factories. The appellant was unable to produce material on this factual aspect. Prior observations in an earlier order relied upon by the appellant were treated as obiter because the question of duty liability was not then in issue. In these circumstances, there was no sufficient basis to interfere with the appellate order or to order a remand for factual verification.

Conclusion: The claim for exemption was not established, and the appeal failed.

Ratio Decidendi: An exemption based on intended or actual inter-factory use cannot be granted unless the assessee establishes the factual use required by the notification and the relevant procedural conditions are shown to have been satisfied or are otherwise dispensable on the proved facts.

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