Intended use for fertiliser manufacture supports excise exemption, and excess use alone does not defeat the benefit.

Sulphuric acid intended for use in fertiliser manufacture qualified for exemption under Notification No. 81/75 when the notification's conditions were met by intended and actual use for the specified purpose. The exemption depended on the Assistant Collector being satisfied that the acid had been so used, and Chapter X compliance applied only where the material was used outside the factory of production. Alleged excess use or diversion within the factory did not, by itself, defeat the exemption where the acid was used in the fertiliser manufacturing process. The benefit was therefore available and denial of exemption was unsustainable.

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Issues: Whether sulphuric acid intended for use in the manufacture of fertilisers was entitled to exemption under Notification No. 81/75 despite alleged excess use or diversion within the factory.

Analysis: The exemption notification, issued under Rule 8(1) of the Central Excise Rules, 1944, exempted sulphuric acid intended for use in the manufacture of fertilisers, subject to the Assistant Collector being satisfied that the acid had been so used and, where used elsewhere than in the factory of production, compliance with Chapter X procedure. The reasoning followed the view that the notification is satisfied by intended and actual use for the specified purpose and that the departmental finding of excessive use did not by itself defeat the exemption when the material was used in the fertiliser manufacturing process.

Conclusion: The exemption was available to the appellant and the denial of benefit was unsustainable.

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