Vertical shaft kiln condition for cement exemption fails when purchased clinker is not shown to be kiln-produced.

The exemption under Notification No. 24/91 depended not merely on the presence of a vertical shaft kiln in the factory, but on clinker used in cement manufacture being produced by that prescribed kiln. As the clinker had been purchased from outside and no evidence showed that it was manufactured using a vertical shaft kiln, the notification condition was not satisfied. Applying earlier tribunal reasoning that treats clinker as an intermediate stage in cement manufacture, the benefit of the notification was denied.

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Issues: Whether the benefit of Notification No. 24/91 dated 25-7-1991 was available to a cement manufacturer who used clinkers purchased from outside, and whether the condition relating to use of a vertical shaft kiln was satisfied.

Analysis: The notification granted exemption subject to the factory using a vertical shaft kiln. The decisive requirement was not merely the physical presence of such a kiln, but that the clinker used for manufacture of cement must have been produced by use of the prescribed kiln. Since the clinkers in question were admittedly purchased from outside and no evidence was produced to show that they had been manufactured by using a vertical shaft kiln, the condition of the notification was not met. The reasoning followed earlier tribunal decisions treating clinker as an intermediate stage in the manufacture of cement and linking eligibility to the prescribed mode of clinker production.

Conclusion: The benefit of the notification was not available to the assessee, and the appeal filed by the Revenue was allowed.

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