Captive consumption treated as home consumption for exemption purposes, with denial upheld under the relevant notification.

Captive consumption within the producing factory was treated as removal for home consumption under Notification No. 44/82. The expression "home consumption" was read in its ordinary sense, as consumption within the country, and the absence of any express exclusion for captively consumed goods was significant because the notification did not mirror the wording used in Notification No. 80/80. In light of amended Rules 9 and 49, read with the retrospective amendment in Section 51 of the Finance Act, 1982, goods consumed in the factory were regarded as removed from the place of manufacture, so exemption was denied.

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Issues: Whether goods consumed within the producing factory as captive consumption could be treated as clearances for home consumption for the purpose of exemption under Notification No. 44/82.

Analysis: The expression "home consumption" was construed in contradistinction to export and in its popular sense as consumption within the country. The notification did not contain any express exclusion for captively consumed goods, unlike Notification No. 80/80, where such exclusion was specifically provided. The amended Rules 9 and 49, read with the retrospective amendment made by Section 51 of the Finance Act, 1982, treated goods consumed or utilised within the factory as removed from the place of manufacture. On that footing, goods used for captive consumption were treated as goods removed for home consumption, and the omission of an exclusion clause in the notification could not be supplied by interpretation.

Conclusion: Captive consumption was held to fall within home consumption for the purpose of Notification No. 44/82, and the denial of exemption was upheld.

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