Strict construction of exemption notification bars relief where parts were not consumed in the factory of production.

Exemption under Notification No. 6/2002-CE was confined to parts consumed within the factory of production for manufacture of the specified goods, and an exemption notification had to be applied strictly according to its terms. Because the parts were cleared to other units and were not shown to have been captively consumed in the appellant's factory, the statutory condition was not satisfied. The exemption was therefore unavailable, and the demand was sustainable.

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Issues: Whether the appellant was entitled to exemption under Notification No. 6/2002-CE for parts cleared to other units when the notification confined the benefit to parts consumed within the factory of production.

Analysis: The exemption entry for parts was limited by Item 21 of List 9 to parts consumed within the factory of production for manufacture of the specified goods. The goods were supplied to other units and were not shown to have been captively consumed in the appellant's factory. An exemption notification has to be applied according to its terms, and the condition of in-factory consumption could not be ignored.

Conclusion: The appellant was not entitled to the exemption, and the demand was sustainable.

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