Captive use exemption applies to factory-made capital goods despite invoices or sale treatment when use remains within the same factory.

Exemption under Notification No. 67/95-C.E. applies to moulds, dies and press tools manufactured in a factory and used within that same factory, because the controlling test is captive use in the factory of production. Raising invoices or treating the goods as sold does not defeat the exemption where actual use remains confined to the factory. The cited precedent was followed as supporting this principle, and the exemption was held admissible on that basis.

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Issues: Whether the benefit of exemption under Notification No. 67/95-C.E. was available to moulds, dies and press tools manufactured in the factory and used within the same factory, notwithstanding that invoices were raised and the goods were treated as sold to a customer.

Analysis: The exemption under Notification No. 67/95-C.E. turns on the manufacture of capital goods in a factory and their use within the factory of production. The decisive criterion is the place and manner of use, not ownership. Since it was not disputed that the goods were used only within the factory, the mere raising of invoices did not alter the character of their captive use. The cited precedent was applied as fully supporting this view.

Conclusion: The exemption was admissible and the denial of benefit was unsustainable.

Ratio Decidendi: Where capital goods are manufactured in a factory and are used within that factory, exemption under the notification applies regardless of invoicing or transfer of ownership, because the controlling test is captive use in the factory of production.

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