Vertical shaft kiln exemption requires actual use in manufacture; cement made from purchased clinker was not covered.

Exemption under Notification No. 24/91-C.E. was held to depend on cement being manufactured through use of the vertical shaft kiln, not merely on the kiln's presence in the factory. Cement made from clinker purchased from outside did not satisfy that process requirement, so the exemption was unavailable for that portion. The benefit remained available only where the cement was produced from clinker manufactured in the factory by use of the vertical shaft kiln. The distinction from earlier notifications, which expressly required captive clinker manufacture, reinforced the narrower reading of the notification and confined the exemption to qualifying production only.

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Issues: Whether cement manufactured from clinker purchased from outside the factory was entitled to exemption under Notification No. 24/91-C.E. on the footing that the factory possessed a vertical shaft kiln.

Analysis: The exemption was held to depend on cement being manufactured by use of the vertical shaft kiln in the process of production. The mere existence of the kiln in the factory was not treated as sufficient where the clinker was purchased from outside and the kiln was not used for manufacturing the cement in question. The distinction drawn in earlier notifications, where captive clinker manufacture was specifically required, also supported the conclusion that the wording of Notification No. 24/91-C.E. did not extend the benefit to cement not produced through use of the kiln. At the same time, the benefit could apply to cement generated from clinker manufactured in the factory by use of the kiln.

Conclusion: Exemption under Notification No. 24/91-C.E. was not available to cement manufactured from purchased clinker, but it remained available only to the extent the cement was produced from clinker manufactured in the factory by use of the vertical shaft kiln.

Final Conclusion: The Revenue succeeded in challenging the blanket grant of exemption, and the benefit was confined to the portion of cement meeting the notification's process requirement.

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