Captive use of packing containers can count as manufacturing consumption, making them eligible for exemption in Vanaspati production.

Fiscal exemption notifications may treat goods as "consumed" when they are utilised in the manufacturing process, even if they retain their identity after use. Metal containers made in the same factory and used to pack Vanaspati were treated as consumed within the factory because packing formed part of the manufacturing process and was necessary to make the product marketable. On that construction, the containers qualified for exemption under Notification No. 10/96-C.E., read consistently with the legislative intent behind the 1996 exemption scheme.

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Issues: Whether metal containers manufactured within the same factory and used for packing Vanaspati are goods "consumed within the factory of their production in the manufacture of goods" so as to qualify for exemption under Notification No. 10/96-C.E. dated 23-7-1996.

Analysis: The expression "consumption" in a fiscal exemption notification is not confined to destruction or physical disappearance of the article. It includes utilisation of the goods in the manufacturing process, even where the article retains its identity after use. Since packing Vanaspati in containers was part of the manufacturing process and was statutorily required to make the product marketable, the containers were used within the factory in the manufacture of Vanaspati. The exemption also had to be construed in light of the legislative intent behind the 1996 exemption scheme and the contemporaneous grant of exemption to goods captively consumed in relation to Vanaspati.

Conclusion: The metal containers were held to be consumed within the factory for manufacture of Vanaspati and were entitled to the benefit of Notification No. 10/96-C.E. dated 23-7-1996.

Ratio Decidendi: In fiscal exemption provisions, "consumption" includes any utilisation of goods in the manufacturing process, and not merely their destruction or exhaustion.

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