Captive consumption exemption applied to broken C.I. sleepers remelted within the factory for manufacture of finished goods.

Broken C.I. sleepers that were recorded in RG-1, remelted within the factory, and reused as input material for manufacture of finished goods were treated as captive-consumption goods covered by Notification No. 217/86-C.E. Because they were not cleared from the factory and were used again in the manufacturing process, no excise duty was chargeable on the facts found, and exemption applied.

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Issues: Whether broken C.I. sleepers, after being recorded in RG-1 and remelted within the factory for manufacture of finished goods, were liable to excise duty or eligible for exemption under Notification No. 217/86-C.E. dated 2-4-1986.

Analysis: The broken sleepers were not cleared from the factory but were used again within the factory as input material for manufacture of finished products. Their remelting and reuse for captive consumption was not disputed, and in such circumstances no revenue loss arose in the ultimate analysis. The notification covered goods used within the factory in the manufacture of final products.

Conclusion: The broken sleepers were eligible for exemption under Notification No. 217/86-C.E. and were not chargeable to duty on the facts found.

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