Vertical shaft kiln exemption condition applies to clinker used in cement manufacture, defeating relief on purchased clinker.

Exemption for cement manufactured under a notification tied to factory capacity and use of a vertical shaft kiln was denied where part of the clinker was purchased from outside and was not shown to have been produced by such a kiln. The controlling wording was read as requiring the clinker used in manufacture to satisfy the kiln-based condition, not merely the factory in general. Because the same language had already been construed against the assessee and that interpretation had been upheld by the Supreme Court, the earlier construction governed here. The exemption was therefore unavailable, and the matter was decided in favour of the Revenue.

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Issues: Whether cement manufactured in a factory claiming exemption under the relevant notifications remained eligible where part of the clinker used was purchased from outside and was not shown to have been manufactured by a vertical shaft kiln.

Analysis: The notifications granted exemption to cement manufactured in factories having the prescribed installed capacity and using a vertical shaft kiln. The decisive wording was not limited to the factory as such, but required the clinker used in the manufacture of cement to satisfy the condition linked with the vertical shaft kiln. The same phraseology had already been interpreted against the assessee in an earlier matter, and that interpretation had been upheld by the Supreme Court. As the notifications in the present appeals used the same language, the earlier construction governed these appeals as well.

Conclusion: The claimed exemption was not available on the facts, and the issue was decided against the assessee and in favour of the Revenue.

Ratio Decidendi: Where an exemption notification conditions relief on cement being manufactured in a factory using a vertical shaft kiln, the condition must be satisfied in relation to the clinker used, and exemption cannot be claimed for cement manufactured from externally purchased clinker not shown to meet that condition.

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