Conditional exemption does not bar captive consumption relief where the final product remains dutiable in law.

A conditional, quantity-based exemption for the final product does not amount to a complete exemption or nil rate of duty, so it does not bar captive consumption exemption under Notification No. 67/1995-CE. Because the benefit under Notification No. 4/2006-CE applied only up to a prescribed clearance limit, the final product remained dutiable in law and the captive consumption exemption was available. The Tribunal followed prior precedent and sustained relief to the assessee, with the Revenue's challenge failing.

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Issues: Whether captive consumption exemption under Notification No. 67/1995-CE can be denied when the final product is cleared under a conditional, quantity-based exemption under Notification No. 4/2006-CE.

Analysis: The final product was not exempt from duty in the sense of a complete or nil-rated exemption. The benefit under Notification No. 4/2006-CE was restricted to clearances up to the prescribed quantity and was therefore only a conditional exemption. Since the final product did not enjoy an absolute exemption or nil rate of duty, the captive consumption exemption could not be denied. The issue had already been settled by prior precedent relied upon by the Tribunal.

Conclusion: The assessee was entitled to the captive consumption exemption under Notification No. 67/1995-CE and the Revenue's challenge failed.

Final Conclusion: The Revenue's appeal was dismissed and the order granting relief to the assessee was sustained.

Ratio Decidendi: A conditional or quantity-limited exemption does not amount to a complete exemption or nil rate of duty, and therefore does not bar captive consumption exemption where the final product is otherwise dutiable.

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