Deemed removal and exemption for captive consumption required fresh findings before duty demand on carbon electrode paste could stand.

Duty on Carbon Electrode Paste could not be sustained without clear findings on whether the goods manufactured between 1-3-1975 and 29-4-1975 were cleared, consumed outside the factory, or captively consumed only after the smelter plant became operational in May 1975. The record suggested the plant and power supply began in May 1975, making earlier captive consumption doubtful, and if consumption occurred after Notification No. 118/75 came into force, deemed removal under Rules 9 and 49 and the notification-based exemption had to be examined on that date. The demand also required an explicit finding on limitation. The matter was remanded for de novo adjudication.

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Issues: Whether duty was payable on Carbon Electrode Paste produced before 30-4-1975 but allegedly consumed only after the commencement of Notification No. 118/75, and whether the demand could be sustained without clear findings on removal, captive consumption, and limitation.

Analysis: The record did not contain clear findings as to whether the goods manufactured during 1-3-1975 to 29-4-1975 were cleared from the factory, consumed outside, or consumed captively only after the smelter plant became operational in May 1975. The newly admitted documents indicated that the plant and power supply commenced in May 1975, making prior captive consumption doubtful. If the goods were consumed after the notification came into force, captive consumption would be treated as deemed removal immediately preceding consumption under Rules 9 and 49, but the exemption under Notification No. 118/75 would then be relevant. The plea of limitation also required examination.

Conclusion: The matter could not be finally decided on the existing findings and required fresh adjudication by the Assistant Collector.

Final Conclusion: The impugned order was set aside and the matter was remanded for de novo consideration, including the question of limitation.

Ratio Decidendi: Where the factual basis for duty demand on alleged captive consumption is unclear, the authority must first determine the time and manner of removal or consumption, and exemption under the relevant notification must be considered according to the date of deemed removal.

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