Exemption for recovered caustic soda upheld where intermediary did not acquire ownership and goods were returned to the originating factory.

Caustic soda recovered from spent caustic soda lye remained exempt under Notification No. 113/74-C.E. where duty had been paid on the original caustic soda, ownership of the spent lye continued with the originating factory, and the recovered material was actually returned to that factory. The presence of an intermediary did not defeat the exemption because the intermediary did not acquire ownership, and the documents showed that the lye and recovered concentrate belonged to and were returned to the original mill. The record therefore supported satisfaction of the notification's conditions, and the contrary view was untenable.

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Issues: Whether the appellants were entitled to exemption under Notification No. 113/74-C.E. in respect of caustic soda recovered from spent caustic soda lye routed through an intermediary, and whether the conditions of continuing ownership in the originating factory and actual return of the recovered material to that factory were satisfied.

Analysis: The notification exempted caustic soda recovered from spent caustic soda lye obtained during manufacturing or processing, subject to the conditions that duty had been paid on the original caustic soda, that ownership of the spent lye continued to vest in the factory where it was obtained, and that the recovered caustic soda was actually returned to that factory. The evidence, including contractual documents, affidavits and delivery challans, showed that Darshan Corporation acted only as an intermediary, that the spent lye continued to belong to Raipur Mfg. Co. Ltd., and that the recovered concentrate was in fact returned to that mill. The presence of an intermediary was not prohibited by the notification, and the contrary conclusion of the lower authority was found untenable on the record.

Conclusion: The exemption conditions were fulfilled and the appellants were entitled to the benefit of Notification No. 113/74-C.E.

Ratio Decidendi: An exemption notification requiring continued ownership in the originating factory and actual return of the recovered goods is satisfied where the goods are routed through an intermediary that does not acquire ownership, and the evidence establishes that ownership remained with the originating factory and the recovered goods were returned to it.

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