End-use compliance under Chapter X places liability on the licence holder, not the manufacturer clearing goods on valid documents.

Excise exemption under Notification No. 191/87-C.E. was conditioned on compliance with Chapter X end-use procedures, including declaration of intended use, bond execution, and reporting of actual use. The responsibility for ensuring that the goods were used for the declared exempt purpose rested with the L-6 licence holder consignee, not with the manufacturer who cleared site mixed slurry explosives on the strength of a valid L-6 licence and CT-2 certificate. Because the appellant supplied the goods in reliance on valid excise documents, it had no duty or standing to monitor the consignee's subsequent use. The duty demand against the appellant was therefore not sustainable.

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Issues: Whether the appellant-manufacturer was liable for central excise duty on site mixed slurry explosives cleared under a valid L-6 licence and CT-2 certificate, when the goods were allegedly not used by the consignee for the intended exempted purpose.

Analysis: Notification No. 191/87-C.E. granted exemption to specified goods used in the manufacture of zinc/lead concentrates subject to compliance with the Chapter X procedure under the Central Excise Rules. Under Rule 192, the person seeking the concession must apply for permission, declare the intended use, and execute the prescribed bond, while Rule 194(2) contemplates periodic reporting of actual use. Rule 196 further provides for recovery of duty and confiscation where goods obtained under the procedure are not duly accounted for or are diverted from the declared purpose. On these provisions, the responsibility for ensuring proper end-use rests on the L-6 licence holder, not on the manufacturer who clears the goods on the strength of the licence and CT-2 certificate. Since the appellant acted on valid excise documents issued to the consignee, it had no obligation or legal standing to monitor the consignee's subsequent use of the goods.

Conclusion: The appellant was not liable to pay duty for any diversion or misuse by the consignee, and the duty demand against the appellant could not be sustained.

Final Conclusion: The duty demand and the impugned order were set aside, and relief was granted to the appellant.

Ratio Decidendi: Where excisable goods are cleared on the basis of a valid L-6 licence and CT-2 certificate under the Chapter X procedure, liability for breach of the intended end-use conditions lies with the licence holder consignee and not with the manufacturer who supplied the goods in reliance on those documents.

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