Intended-use exemption for cut tobacco cannot be denied merely because the goods were not ultimately used in manufacture.

An exemption notification covering cut tobacco for use in the manufacture of machine rolled cigarettes was construed to apply where the goods were intended for that use, even if they were not ultimately so used. The operative test was the wording of the notification, which supported exemption on intended use rather than actual consumption in manufacture. On that basis, the lower appellate view was upheld and the duty demand founded on denial of the notification did not survive.

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Issues: Whether Notification No. 356/86 granting exemption to cut tobacco for use in the manufacture of machine rolled cigarettes applied where the tobacco was intended for such manufacture but was not actually so used, and whether duty at Rs. 50 per kilogram was correctly levied.

Analysis: The notification was construed to cover cut tobacco meant for use in the manufacture of machine rolled cigarettes. The fact that the tobacco was not ultimately used in that manner did not displace the benefit where the wording of the notification supported exemption on the basis of intended use. The appellate authority had already accepted this interpretation, and no material was shown to warrant interference with that view.

Conclusion: The lower appellate finding was upheld and the demand based on denial of the notification failed.

Ratio Decidendi: Where an exemption notification is worded to cover goods intended for a specified end use, the benefit cannot be denied merely because the goods were not ultimately put to that use, if the statutory language supports exemption on intended use.

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