In-factory use of tools under Notification No. 58/86 defeats denial of exemption despite recovery of value from buyers.

Exemption under Notification No. 58/86 could not be denied merely because the value of the tools was recovered from buyers, where the tools were admittedly manufactured and used in the same factory for producing the final product. The notification required only in-factory use of the tools and imposed no condition on ownership. Recovery of value from buyers did not defeat the exemption, so denial of the notification benefit was unsustainable.

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Issues: Whether the benefit of Notification No. 58/86 dated 10-2-1986 could be denied merely because the value of the tools was recovered from the buyers, when the tools were admittedly used in the manufacture of the final product in the same factory.

Analysis: The only requirement in the notification was that the tools manufactured in the factory must be used in the same factory where they were manufactured. The admitted use of the tools in the manufacture of the final product satisfied that condition. The notification did not prescribe any condition relating to ownership of the tools, and recovery of their value from the buyers did not provide a basis to deny the exemption.

Conclusion: The exemption could not be denied on the ground of transfer of ownership or recovery of value from the buyers, and the denial of the notification benefit was unsustainable.

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