Exemption notification limited to specified defence suppliers cannot be extended to an upstream paint manufacturer

Exemption under Notification No. 63/95-CE was confined to excisable goods manufactured by the specified public sector undertakings for supply to the Ministry of Defence. A paint manufacturer supplying goods to Bharat Earth Movers Ltd., but not itself being one of the specified manufacturers or making direct supply for the notified purpose, could not claim the benefit. Trade notices and departmental clarifications concerning duty-paid inputs used by job-workers did not extend the exemption to raw materials or upstream suppliers. The exemption claim therefore failed, and the demand or disallowance was sustained.

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Issues: Whether the appellants were entitled to exemption under Notification No. 63/95-CE dated 16-3-95 for paints supplied to Bharat Earth Movers Ltd. and whether the notification could be extended to a manufacturer who was not one of the specified manufacturers supplying goods directly to the Ministry of Defence.

Analysis: The notification granted exemption only to excisable goods manufactured by the specified public sector undertakings for supply to the Ministry of Defence. The appellants were manufacturers of paints and were not themselves among the specified manufacturers. The materials on record, including the trade notice and departmental clarification, showed only that duty-paid inputs processed by job-workers for the specified undertakings could raise a doubt about duty at that stage, and did not exempt raw materials or inputs supplied to the specified undertaking itself. The appellants were not supplying the impugned goods directly to the Ministry of Defence, and the clarification could not be extended to confer exemption on them.

Conclusion: The appellants were not entitled to the benefit of Notification No. 63/95-CE and the exemption claim failed.

Final Conclusion: The exemption notification was held inapplicable to the appellants, and the demand/disallowance was sustained.

Ratio Decidendi: An exemption notification confined to specified manufacturers making supplies for a specified end use cannot be extended to an upstream supplier who is neither a specified manufacturer nor making direct supply for the notified purpose.

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