End-use conditions for concessional duty failed where goods were not actually used in manufacture of paints and varnishes.

Concessional central excise duty under Notification No. 75/84-C.E. was available only for mixed xylenes and toluene intended for use in the manufacture of paints and varnishes. Where the thinner made from the duty-concession goods was cleared outside the factory and not actually used in the specified manufacturing process, the end-use condition was not met. In the absence of proof of actual use for paints and varnishes, the concession could not be claimed.

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Issues: Whether the appellants were entitled to concessional rate of duty under Notification No. 75/84-C.E. dated 01.03.1984 despite the materials being used otherwise than as contemplated by the notification.

Analysis: The notification granted concessional duty only for mixed xylenes and toluene intended for use in the manufacture of paints and varnishes. The record showed that the thinner manufactured from the goods brought at concessional rate was cleared outside the factory and was neither used within the factory for the specified manufacturing activity nor moved under the procedure meant for such end-use. In the absence of proof of actual use in the manufacture of paints and varnishes, the condition for availing the concession was not satisfied.

Conclusion: The appellants were not entitled to the concessional benefit under the notification.

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