Captive consumption exemption cannot be denied for lack of raw material ownership, and new demand grounds cannot be introduced later.

An exemption for captively consumed goods cannot be denied on an ownership requirement not found in the notification, so the job worker's lack of title to raw material did not by itself defeat the benefit. A demand also cannot be sustained on a fresh ground introduced at adjudication when that basis was not stated in the show cause notice. On the facts, the raw bauxite was itself exempt and no excise violation or revenue loss was established. The duty demand and penalties were therefore unsustainable, and the impugned order was set aside.

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Issues: Whether exemption under the captive consumption notification was unavailable merely because the job worker did not own the raw material, and whether the demand could be sustained on a ground not raised in the notice.

Analysis: The arrangement was one of job work followed by purchase, and the show cause notice proceeded on the footing that ownership of the raw material by the job worker was necessary for the exemption. That basis was not supported by the notification. The adjudicating authority instead introduced a different case on the alleged effect of another exemption notification, but that new ground was not part of the notice and could not be used to confirm demand. The record also showed that the raw bauxite itself was exempted from duty, and the facts did not establish any excise law violation or loss of revenue.

Conclusion: The exemption was not denied merely for want of ownership by the job worker, and the demand could not be sustained on the shifted ground.

Final Conclusion: The duty demand and penalties were unsustainable, and the impugned order was set aside.

Ratio Decidendi: An exemption for captively consumed goods cannot be denied on an ownership requirement that is not contained in the notification, and a demand cannot be upheld on a fresh ground not set out in the notice.

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