Strict construction of exemption notifications bars benefit where parts are cleared to other units, not captively consumed in the factory.

Exemption under Notification No. 6/2002 was confined to parts consumed within the factory of production for manufacture of the specified goods. The goods were cleared to other units and not used as captive consumables in the appellants' factory, so the statutory condition was not met. An exemption notification must be applied strictly according to its terms, and the benefit could not be extended merely because the parts were intended for use in non-conventional energy devices elsewhere. The exemption was therefore denied, and the demand and penalty were upheld.

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Issues: Whether the appellants were entitled to exemption under Notification No. 6/2002 for parts supplied to other units, when the relevant entry confined the benefit to parts consumed within the factory of production.

Analysis: The exemption entry was limited to parts consumed within the factory of production for manufacture of the specified goods. The goods were admittedly cleared to other units and not consumed in the appellants' factory. The condition of captive consumption was therefore not satisfied. An exemption notification must be applied according to its terms, and the Tribunal could not disregard the express restriction in the notification merely because the goods were otherwise meant for use in non-conventional energy devices.

Conclusion: The appellants were not entitled to the exemption, and the demand and penalty were upheld against the assessee.

Ratio Decidendi: Where an exemption notification restricts the benefit to parts consumed within the factory of production, the exemption cannot be extended to goods cleared to other units for use elsewhere.

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