Exemption for intermediate goods used in pesticide manufacture upheld where end use remained within Chapter 38.

Notification No. 43/88-C.E. granted exemption for specified goods used in the manufacture of pesticides falling under Chapter 38. The presence of an intermediate product in the manufacturing chain did not, by itself, defeat the exemption where the end use remained pesticide manufacture and the notification imposed no separate restriction on such intermediate processing. On similar facts, phosphorous trichloride used in making tri-methyl phosphite as an intermediate for pesticides qualified for the benefit, and the departmental appeal was rejected.

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Issues: Whether the assessee was entitled to the benefit of Notification No. 43/88-C.E. in respect of phosphorous trichloride used as an intermediate product in the manufacture of pesticides, notwithstanding that it was also used in the manufacture of tri-methyl phosphite.

Analysis: The notification covered the specified goods falling under the relevant tariff chapters and extended exemption where the goods were used in the manufacture of pesticides falling under Chapter 38. The earlier order in the connected matter had already held that the presence of intermediate products in the manufacturing chain did not by itself justify denial of the exemption when the end use was manufacture of pesticides/insecticides covered by Chapter 38 and the notification did not impose any additional restriction against such intermediate processing. The facts in the present appeal were found to be similar, with phosphorous trichloride being used in the manufacture of tri-methyl phosphite as an intermediate product for pesticides.

Conclusion: The benefit of Notification No. 43/88-C.E. was available to the assessee, and the Departmental appeal was rejected.

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