Exemption notification liability cannot be fastened on a recipient user when the actual exempting manufacturer is not identified.

Duty under Notification No. 239/86-C.E. could not be fastened on the L-6 licence holder merely because it received and used the goods, where the actual L-4 manufacturer who availed the exemption was not identified or put to notice. The exemption operated at the manufacturer's clearance stage, and in the absence of the CT-2 certificates on record, no valid basis existed to sustain the demand against the recipient. No misuse or diversion of goods received under Chapter X was alleged, and the eligibility of Plough Lamps as parts was left undecided because the manufacturer was not before the authority. The demand was therefore held unsustainable.

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Issues: Whether duty could be demanded from the L-6 licence holder in respect of parts received under Notification No. 239/86-C.E. when the actual manufacturer who availed the exemption was not before the authority and no misuse of goods received under Chapter X was alleged.

Analysis: The exemption under Notification No. 239/86-C.E. operated at the stage of the manufacturer who cleared the goods under the notified procedure. The record did not identify the actual L-4 manufacturers who had availed the benefit, and the CT-2 certificates were also not on record. In these circumstances, a demand could not be sustained against the L-6 holder merely because it received and used the goods. As there was no allegation that the goods received under Chapter X were misused or diverted from the intended purpose, no valid basis existed to fasten duty liability on the L-6 holder. The eligibility of Plough Lamps as parts was left undecided because the manufacturer was not put to notice.

Conclusion: The duty demand against the L-6 licence holder was not sustainable and was set aside, while the Revenue's appeal against deletion of the demand failed.

Final Conclusion: Liability under the exemption notification could not be imposed on a person who was not shown to be the manufacturer availing the exemption, and the demand was invalid in the absence of notice to the actual manufacturer.

Ratio Decidendi: A duty demand under an exemption notification must be raised against the person on whom the liability legally falls, and it cannot be sustained against a recipient user when the actual exempting manufacturer is not identified or put to notice.

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