Exemption for captive-use ammonia in fertilizer manufacture upheld despite industrial chemical sales of the finished products.

Anhydrous ammonia brought into a factory under Chapter X procedure and used to manufacture ammonia, which was then captively consumed in producing di-ammonium phosphate, ammonium sulphate and urea, was treated as meeting the exemption condition where the end products were fertilizers. The fact that those products were also sold for industrial use as chemicals did not defeat the exemption, because eligibility depended on the notification's own terms and not on the later commercial use by purchasers. The text applies the principle that exemption conditions cannot be narrowed by adding a restrictive intention not found in the notification, and relies on prior Supreme Court authority supporting captive use for fertilizer manufacture.

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Issues: Whether anhydrous ammonia brought into the factory under Chapter X procedure and used in the manufacture of ammonia, which was then captively consumed in the manufacture of di-ammonium phosphate, ammonium sulphate and urea, remained eligible for exemption merely because the finished products were also sold for industrial use as chemicals.

Analysis: The exemption turned on satisfaction of the notification condition, not on the subsequent commercial use of the finished products by purchasers. The goods manufactured were fertilizers, and the fact that they were also sold for use as chemicals did not negate the character of the end products for the purpose of the notification. Applying the principle that an exemption cannot be denied by importing a restrictive intention not found in the notification, the earlier Supreme Court ruling on a similar notification supported the view that captive use leading to fertilizer products satisfied the prescribed condition.

Conclusion: The exemption was available, and the demand was not sustainable.

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