TaxTMI 
TaxTMI 
1983 (10) TMI 248
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....s etc. The appellants have not satisfied that the thinner manufactured from the toluene was so used. Accordingly, demand of duty is justifiable. 2. We can see from this that the Appellate Collector held that the toluene, if it was to be given exemption under Notification No. 35/73-C.E., should have been used in the manufacture of thinners used for paints. The show cause notice dated 8-3-1980 however proceeded on the charge that the goods had not been used as thinners in the manufacture of paints etc. as per notification 35/73-C.E. But the facts are different as we shall demonstrate below. 3. Notification No. 35/73-C.E., dated 1-3-1973 exempts motor spirit known as benzene, ethyl benzene, benzole, toluene toluol, solvent naphtha and mixed xylenes consisting of orthoxylene, metaxylene, paraxylene, and ethyl bezene and falling under Item No. 6, from so much of the duty of excise leviable thereon as is in excess of Rs. 472.50 per kilolitre at 15 degrees of centigrade thermometer. 4. There is also a proviso which provided that an officer not below the rank of an Assistant Collector of Central Excise was satisfied that the motor spirit was intended to be used, amo....
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....the notification would be used in manufacture of thinners for the manufacture of paints, varnishes etc. But he goes on to say that under the scheme of this exemption notification it is not open to a person to take a licence for exclusive so called of thinners. He comes to the conclusion that there has been no manufacture of thinners because all that Arti Paints did was to add certain chemical like ethyl acetate mineral turpentine, methanol. From this he concluded that there was no industrial use within the meaning of Rule 192 since there was no manufacture. Therefore he says that there was no manufacture of the kind under Notification No. 35/73-C.E. A little further on he says that there has been no proper accounting and use of the goods received by Arti since Arti was not a paints manufacturer and therefore, that means the goods were not utilized in the manufacture of paints. This in turn means the goods were sold as such after some physical treatment. 8. Much objections were raised at the time of the adjudication proceedings before the Assistant Collector, one of which was that under Chapter X it was not necessary to produce D-3 declaration, but these disputes are not rea....
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....t the other side was totally wrong. But our view is that both sides are in error. We have already seen that the Notification No. 35/73-C.E. allows the use of the toluene as solvent or diluent or thinner for the manufacture of paints by the person who receives the motor spirits under the notification. Although the concession is earned by the manufacturer of the motor spirits, to earn the concession it is also necessary that the goods intended to be so used are also actually used in the manner provided by the notification, as can be seen from the fact that the exemption was to be allowed only if the procedure laid down in Chapter of the Central Excise Rules, 1944, was followed, if the toluene is put to the intended use elsewhere than in the factory of its production. At the hearing the learned Counsel for the Department argued that Chapter X procedure is envisaged for the removal of the finished thinners from the thinner manufacture to the paints manufacturer but we are not able to agree with this. The Chapter X procedure must be followed for the movements of the motor spirit from the motor spirit manufacturer to the person who uses motor spirit as solvent or diluent or thinner for t....
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....priate use of the material. The demand is a demand under Rule 196 and it falls under Chapter X. 13. This rule provides that if any excisable goods obtained under Rule 192 are not duly accounted for as having been used for the purpose and in the manner stated in the application or are not shown to the satisfaction of the proper officer to have been lost or destroyed, the applicant shall on demand by the proper officer immediately pay the duty leviable on such goods. Under Rule 192 the Central government can by notification under Rule 8 sanction the remission of duty on excise goods used in a specified industrial process and the person who wants to avail the exemption is to make an application to the Collector stating the estimated annual quantity of the assessable goods required and the purpose for and the manner in which it is intended to use them and shall declare that the goods will be used for such purpose and in such a manner. The rule requires the central excise to satisfy themselves by inspection that the concession can be granted without danger to the revenue and that the premises are suitable etc. Certain other formalities are to be undergone, but we need not dwell ....