End-use verification and settled departmental practice cannot defeat exemption where facts and law remain unchanged.

Exemption under Notification No. 75/84-C.E. could not be denied on a supposed mandatory end-use verification requirement for benzene, toluene and xylene, as the wording was treated as consistent with the earlier notification and did not justify proof of actual end use on the facts stated. The Department also could not depart from its earlier acceptance of the same exemption position where there was no change in facts, law, manufacture, or tariff position. The settled departmental view and prior grant of benefit supported continuance of the exemption, and the demand and denial of benefit were unsustainable.

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Issues: (i) Whether exemption under Notification No. 75/84-C.E. could be denied on the footing that end-use verification of benzene, toluene and xylene was mandatory; (ii) Whether the Department could depart from its earlier acceptance of the same exemption position in the absence of any change in facts, law or manufacture.

Issue (i): Whether exemption under Notification No. 75/84-C.E. could be denied on the footing that end-use verification of benzene, toluene and xylene was mandatory.

Analysis: The notification was read as substantially in line with the earlier notification governing the same goods and intended use. The Court treated the difference in wording as insignificant and held that the notification did not justify insisting upon proof of actual end-use in the circumstances of this case. Reliance on the principle of implied end-use verification was found inapplicable because there was no material showing that the goods manufactured had uses outside the declared manufacturing chain, and the lower orders did not rest on any such finding.

Conclusion: The requirement of end-use verification was not warranted, and denial of exemption on that basis was unsustainable, in favour of the assessee.

Issue (ii): Whether the Department could depart from its earlier acceptance of the same exemption position in the absence of any change in facts, law or manufacture.

Analysis: The earlier withdrawal of the show cause notice and grant of benefit were treated as significant. The Court applied the principle that, where a settled departmental view has been acted upon and there is no change in facts, law, process of manufacture, or tariff position, the Department should not arbitrarily reverse its stand. The long-standing treatment of the appellants' clearances and the absence of fresh material justified continuance of the earlier position.

Conclusion: The Department was not justified in reopening the matter and changing its stand, in favour of the assessee.

Final Conclusion: The demand and the impugned denial of exemption could not be sustained, and the appellants were entitled to the benefit of the notification.

Ratio Decidendi: Where an exemption notification covers goods intended for a specified use and the Department has previously accepted that position without any change in facts or law, it cannot insist on a new end-use verification requirement or arbitrarily depart from its settled stand.

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