Captive consumption of customer-supplied dies and moulds barred duty demand where goods were not removed from the factory.

Customer-supplied dies and moulds used in manufacture were not liable to duty on the facts found, because they were captively consumed and not removed from the factory. The Tribunal accepted reliance on the exemption notification and held that the earlier observation on includibility of amortised cost could not sustain the demand in the present factual matrix. On that record, the proposed levy on the moulds and dies themselves was not supported, and the demand was held unsustainable.

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Issues: Whether the amortised cost or development charges relating to dies and moulds supplied by customers and used in manufacture were includible in the assessable value of the final products, and whether duty could be demanded when such moulds were not removed from the factory in the light of the exemption notification.

Analysis: The Tribunal noted that the matter was in a second round and that the moulds and dies were not manufactured by the appellant but were supplied by the customers for use in manufacture of the excisable goods. It held that duty demand on goods that were captively consumed did not arise in the facts found, and accepted the appellant's reliance on the exemption notification. The earlier observation regarding includibility of amortised cost did not survive as a basis for confirming the demand in the present factual matrix, since the record did not support levy on the moulds and dyes themselves when they had not been removed from the factory.

Conclusion: The demand was not sustainable and the appeal was allowed.

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