Conditional excise exemption on unused stock fails when goods are not used before withdrawal of the concession.

Where an exemption for artificial staple fibre and tow was conditional on their use in blending with cotton for manufacture of cotton yarn, unused stock on the date of withdrawal could not retain concessional duty benefit. The later use of the goods did not satisfy the exemption condition because the relevant requirement was actual use before the concession ended, and the Chapter X procedure also applied where goods were used otherwise than in the factory of production. The duty demand on the unused stock was therefore upheld, and the claim to exemption failed.

---

---

Issues: Whether the assessee was entitled to retain the benefit of concessional excise duty on stocks of artificial staple fibre and tow lying unused on the date the exemption was withdrawn, on the basis that the goods were used subsequently in the manufacture of cotton yarn.

Analysis: The concessional rate under the notification was conditional upon the fibre and tow being used for blending with cotton in the manufacture of cotton yarn and the prescribed Chapter X procedure being followed where the goods were used elsewhere than the factory of production. On the relevant date, the stock had not been used for the intended purpose. Once the concession was withdrawn, later use of the goods could not satisfy the condition attached to the exemption. The Chapter X scheme also fastened liability where the intended conditions of receipt and use were not fulfilled.

Conclusion: The assessee was not entitled to the exemption for the unused stock, and the duty demand was upheld.

Final Conclusion: The appeal failed because the withdrawal of the concession defeated the claim to exemption on stock not utilised before the effective date of withdrawal, notwithstanding later use.

Ratio Decidendi: Where an exemption is conditional upon actual use of goods for the specified purpose before withdrawal of the concession, subsequent use after withdrawal does not preserve the exemption for stock remaining unused on the withdrawal date.

---