Exemption for chemicals extended to mixed-xylene used in paints and varnishes; tariff entries could not narrow the notification's wording.

Mixed-xylene cleared to another factory for use in making paints and varnishes was held to fall within the exemption for "chemicals" under Notification No. 276/67. The Tribunal held that the term "chemicals" in the exemption schedule was not confined to items specifically listed in Tariff Item 14AA, and that the separate tariff treatment of paints and varnishes did not exclude them from the notification's wider language. It also accepted that the goods could fall within the broader description "chemical formulations", and that tariff entries could not control the wording of the exemption schedule. The assessee was therefore entitled to exemption, and the reassessment order was set aside.

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Issues: Whether mixed-xylene cleared to another factory for use in the manufacture of paints and varnishes was eligible for exemption under Notification No. 276/67 as falling within the expression "chemicals" in the relevant schedule.

Analysis: The Tribunal followed its earlier decision in the assessee's own case on identical facts and held that the expression "chemicals" in the schedule was not confined to items specifically enumerated in Tariff Item 14AA. The fact that paints and varnishes were separately dealt with in another tariff item did not prevent them from being treated as chemicals for the purpose of the notification. The Tribunal also noted that the goods could fall within the wider description "chemical formulations" in the schedule, and that tariff entries could not be read as controlling the language used in the exemption schedule.

Conclusion: The assessee was entitled to exemption under Notification No. 276/67, and the reassessment order was set aside.

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