Exemption for goods intended for further manufacture applies where fire destroys them before use, with no diversion shown.

Goods removed within the factory under an exemption notification for intended further manufacture remained covered by the exemption when they were destroyed in a fire before actual use. The fire loss was supported by the fire officer's report and insurance settlement, and there was no allegation of diversion or non-occurrence of the fire. On those facts, the intended-use condition was treated as satisfied, and duty could not be demanded on goods lost in the accident.

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Issues: Whether excise duty was demandable on goods removed within the factory under the exemption notification but destroyed in a fire before actual use in the intended manufacturing process.

Analysis: The goods were removed under Notification No. 118/75 for intended use in further manufacture within the same factory. The loss of the goods in a fire accident was supported by the fire officer's report and insurance settlement, and there was no allegation that the fire did not occur or that the goods had been diverted for other purposes. In these circumstances, the intended use requirement stood satisfied and the department could not insist on duty for goods lost in fire.

Conclusion: The demand of duty was not justified and the exemption benefit was available to the assessee.

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