Captive consumption exemption denied where final goods were cleared at nil rate and not on payment of duty.

Notification No. 67/95-C.E. applies only where captive inputs are used to manufacture dutiable final products cleared on payment of duty. Re-processed granules made from captive waste and scrap were cleared at nil rate under Notification No. 131/95-C.E., so they could not be treated as goods cleared on payment of duty. The contention that a nil rate of duty was equivalent to duty payment was rejected, and the exemption under Notification No. 67/95-C.E. was therefore unavailable for the captive waste and scrap.

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Issues: Whether the assessee was entitled to the benefit of Notification No. 67/95-C.E. in respect of waste and scrap used captively in the manufacture of re-processed granules cleared at nil rate of duty.

Analysis: The benefit of the notification was available only where the inputs were used in the manufacture of dutiable final products cleared on payment of duty. The re-processed granules manufactured out of captive waste and scrap were cleared at nil rate of duty under Notification No. 131/95-C.E., dated 6-9-95. Goods cleared under exemption at nil rate could not be treated as goods cleared on payment of duty, and the plea that nil rate amounted to appropriate duty was rejected.

Conclusion: The benefit of Notification No. 67/95-C.E. was rightly denied to the assessee.

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