Intended use test governs fertilizer exemption; subsequent loss of urea does not defeat the benefit absent an actual-use .

Exemption under Notification No. 6/02-CE and Notification No. 4/06-CE was available where urea was cleared with the intention of being used as fertilizer. The relevant wording was construed to require intended use, not actual use, because the notifications contained no express condition for end-use proof or a mandatory actual-use requirement. Subsequent loss of part of the urea during transit, re-bagging, or standardisation did not defeat the exemption, since the purpose at the time of clearance remained unchanged. On that construction, the duty demand was unsustainable.

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Issues: Whether the exemption under Notification No. 6/02-CE dated 01/03/2002 and Notification No. 4/06-CE dated 01/03/2006 could be denied on the ground that urea cleared for use as fertilizer was subsequently lost in transit, re-bagging and standardization and was not actually used as fertilizer.

Analysis: The notifications were construed as granting exemption where the goods were cleared with the intention of being used as fertilizer. The relevant expression was held to mean intended use, not actual use, in the absence of any specific condition requiring actual use or production of end-use proof. Since the urea was cleared for the purpose of use as fertilizer and there was no indication of any contrary intention at the time of clearance, subsequent loss of part of the quantity during transit and handling did not defeat the exemption.

Conclusion: The exemption remained available despite subsequent loss of the urea, and the duty demand was unsustainable.

Ratio Decidendi: Where an exemption notification requires goods to be used for a specified purpose, and no express condition mandates actual use, the criterion is satisfied if the goods are cleared with the intention of such use; subsequent loss or destruction does not extinguish the exemption.

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