End-use exemption for sulphuric acid applied where intermediate processing still led to fertilizer manufacture.

Sulphuric acid used first to manufacture phosphoric acid, and then ultimately cleared for fertilizer manufacture, was treated as satisfying the end-use condition in Notification No. 81/75 read with the 12-12-1986 clarification. The Court read the notification and clarification together and accepted that use through an intermediate product did not defeat the exemption where the final destination was fertilizer manufacture. On those facts, the exemption was held applicable and the Revenue's challenge failed.

---

---

Issues: Whether sulphuric acid used in the manufacture of phosphoric acid, which was later cleared to a third party for use in fertilizer manufacture, was entitled to exemption under Notification No. 81/75 dated 22-3-1975 read with the clarification dated 12-12-1986.

Analysis: The exemption was available to sulphuric acid intended for use in the manufacture of fertilizers. The relevant factual position accepted by the Court was that the sulphuric acid manufactured by the assessee was used through an intermediate stage of phosphoric acid, and the end product ultimately reached fertilizer manufacture. The notification and the clarification were read together to give effect to the intended end-use condition, and the Court treated the intermediate conversion and subsequent use as sufficient to satisfy the exemption requirement.

Conclusion: The exemption applied, and the question was answered in favour of the assessee and against the Revenue.

Final Conclusion: The Revenue's challenge failed because the end-use condition under the exemption notification was held to be satisfied on the accepted facts.

Ratio Decidendi: An exemption conditioned on intended use in fertilizer manufacture is when the goods are demonstrably used through an intermediate product and ultimately serve that end use, as clarified by the applicable departmental clarification.

---