Commercial identity and actual use determine fertilizer exemption, not mere technical capability to serve as fertilizer.

Exemption under Notification No. 66/71 depended on whether ammonium chloride had the commercial identity of fertilizer and was actually used in manufacturing fertilizer. The text draws a distinction between mere technical capability and market reality: higher-purity ammonium chloride was treated as commercially different from fertilizer-grade material, and classification was to follow commercial parlance. Because the respondent's own classification list did not show the goods as cleared or sold as fertilizer, and the cited circular did not extend the exemption beyond fertilizer as such, the goods were not entitled to the notification benefit.

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Issues: Whether ammonium chloride manufactured by the respondent was entitled to exemption under Notification No. 66/71 dated 29-05-1971 as fertilizer used in the manufacture of fertilizer falling under Item 14HH.

Analysis: The entitlement to exemption depended on whether the goods, in commercial reality, could be regarded as fertilizer and whether they were shown to have been used in the manufacture of fertilizer. The distinction between theoretical capability and commercial identity was material. Ammonium chloride of higher purity was commercially different from fertilizer grade ammonium chloride, and classification had to follow commercial parlance rather than a merely technical possibility of use. The respondent's own classification list stated that the goods were neither cleared nor manufactured and sold as fertilizer, and the cited circular did not extend exemption beyond fertilizer as such.

Conclusion: The goods were not shown to be used in the manufacture of fertilizer and were not entitled to the benefit of the notification. The appeal succeeded and the exemption claim failed.

Ratio Decidendi: For excise classification and exemption, the relevant inquiry is the commercial identity and actual use of the product, not its theoretical capability of being used as fertilizer.

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