Captive consumption exemption under Notification 217/86 required fresh merits review, and the matter was remanded for de novo adjudication.

Exemption under Notification No. 217/86 for captively consumed goods was not examined by the authority below with reference to the relevant notification. The record indicated a plausible basis for the assessee's claim, so the exemption question required reconsideration on merits after giving the assessee an opportunity to raise all connected pleas. The matter was remanded to the jurisdictional Commissioner for de novo adjudication, and the assessee was granted liberty to urge all connected contentions. The assessment was therefore set aside only to the extent necessary for fresh consideration of the exemption issue.

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Issues: Whether the assessee was entitled to consideration of exemption under Notification No. 217/86 for goods captively consumed, and whether the matter required remand for fresh adjudication.

Analysis: The exemption claim under Notification No. 217/86 had not been examined by the authority below with reference to the relevant notification. The record showed a plausible basis for the assessee's claim, and the issue required reconsideration on merits after giving the assessee an opportunity to raise all connected pleas.

Conclusion: The matter was remanded to the jurisdictional Commissioner for de novo consideration, with liberty to the assessee to urge all connected contentions.

Final Conclusion: The appeal succeeded only to the extent that the assessment was set aside for fresh adjudication on the exemption question.

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