Captive consumption excluded from exemption threshold when goods are used within the factory for further manufacture.

Explanation VI to Notification No. 1/93 excluded clearances of specified goods used within the factory for further manufacture from the aggregate value of clearances for exemption purposes. Applying that construction, the Tribunal treated the expression "specified goods" as wide enough to cover the excisable goods listed in the annexure and followed the principle that goods captively consumed are not to be counted for the exemption threshold. On that basis, the value of parts of power driven pumps used captively in manufacturing power driven pumps could not be added to the aggregate clearance value.

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Issues: Whether the value of parts of power driven pumps captively consumed within the factory in the manufacture of power driven pumps was includible in the aggregate value of clearances for exemption under Notification No. 1/93 dated 28-3-93.

Analysis: Explanation VI to Notification No. 1/93 excluded clearances of specified goods used for further manufacture of specified goods within the factory from the computation of aggregate value of clearances. The Tribunal followed its earlier view that the expression "specified goods" in the Explanation was wide enough to cover excisable goods mentioned in the annexure, and also relied on the principle that clearances for captive consumption are not to be counted while computing the exemption limit. On that basis, the value of goods consumed captively could not be added to the aggregate clearance value.

Conclusion: The captively consumed parts were not includible in the aggregate value of clearances, and the Revenue's appeals failed.

Ratio Decidendi: Where an exemption notification excludes specified goods used within the factory for further manufacture, clearances of goods captively consumed are not to be included in computing the aggregate value of clearances for the exemption threshold.

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