Exemption for skimmed milk powder applies only when used to regenerate liquid milk, not as an intermediate step in making ice-cream.

Skimmed milk powder used in making ice-cream was held not to qualify for exemption under the notification limited to powder used for regeneration of liquid milk. The notification was construed narrowly: its object was to encourage supply of liquid milk, so the concession applied only where the powder was actually used to regenerate liquid milk, not where it was merely liquified as an intermediate stage in producing another finished product. The fact that the end product was ice-cream meant the statutory condition for exemption was not met, and the tariff advice did not bind the authorities' independent assessment.

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Issues: Whether skimmed milk powder used in the manufacture of ice-cream, after being liquified at an intermediate stage, was entitled to exemption under the notification meant for skimmed milk powder used for regeneration of liquid milk.

Analysis: The exemption was confined to skimmed milk powder falling under Item 1B of the First Schedule to the Central Excises and Salt Act, 1944 and was available only when the powder was used for regeneration of liquid milk. The notification's wording and its object showed that the concession was designed to promote supply of liquid milk, not to extend to all end-products in whose manufacture the powder was first liquified. Since the petitioners' product was ice-cream and the liquification of the powder was only an intermediate step in that process, the condition of use for regeneration of liquid milk was not satisfied. The tariff advice did not prevent the authorities from independently deciding the issue.

Conclusion: The exemption was not available to skimmed milk powder used in the manufacture of ice-cream, and the petition was liable to be rejected.

Final Conclusion: The exemption notification was construed narrowly and was held inapplicable where skimmed milk powder was only incidentally liquified in the course of making ice-cream rather than regenerated into liquid milk for consumption.

Ratio Decidendi: An exemption granted for skimmed milk powder used for regeneration of liquid milk applies only when the powder is actually used to regenerate liquid milk and does not extend to cases where liquification occurs merely as an intermediate step in producing another finished product.

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