Integrated industrial use of captive electricity qualifies for exemption even when the consuming activity is physically separate.

Electricity consumed for operating a ropeway linking a captive mine with a cement factory was treated as eligible for exemption under Notification No. 52/78 because the mine activity formed part of an integrated industrial establishment. The notification was read as covering captive consumption within the industrial unit or related establishment, and the exemption was not denied merely because the consuming activity was physically separate from the main factory. On that basis, exemption was allowed for the ropeway use of electricity and the corresponding demand was not sustained to that extent.

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Issues: Whether electricity used for operating a ropeway connecting a captive mine with a cement factory was eligible for exemption under Notification No. 52/78.

Analysis: The exemption notification covered electricity consumed in a generating station, industrial unit, or establishment. The mine activity, though physically separate from the factory, formed part of an integrated establishment connected with the industrial operations of the factory. The broader object of the notification supported exemption for captive consumption within such integrated industrial activity.

Conclusion: The electricity used for operating the ropeway was entitled to exemption under Notification No. 52/78, and the appeal succeeded.

Final Conclusion: The appellants were held eligible for the exemption, and the demand was not sustained to that extent.

Ratio Decidendi: Where electricity is consumed in a function integrally connected with an industrial establishment, exemption available to captive consumption is not denied merely because the consuming activity is physically situated away from the main factory.

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