COLLECTOR OF CENTRAL EXCISE, BOMBAY versus MIS. SHALIMAR CHEMICAL INDUSTRIES PVT. LTD.

Citation: [2001] 1 S.C.R. 333 · Decided: 11-01-2001 · Supreme Court of India · Bench: B.N. KIRPAL · Disposal: Appeal(s) allowed

Judgment (excerpt)

COLLECTOR OF CENTRAL EXCISE, BOMBAY 
A 
v. 
MIS. SHALIMAR CHEMICAL INDUSTRIES PVT. LTD. 
) 
JANUARY 11, 2001 
. 
.(... 
[B.N. KIRPAL, RUMA PAL AND BRIJESH KUMAR, JJ.) 
B 
z--
Central Excise: 
Central Exe ise Rules, 1944-Chapter X-Exemption notification ta 
Benzene, Toluene and Xylene for specified intended use-Evidence of end- c 
..-
'" 
use-Necessity of-Held, exemption cannot be granted in absence of proof 
of end-use. 
Notification dated 1st March, 1984 was issued under ChapterX of the 
Central Excise Rules, I 944 granting exemption from excise duty to Benzene, 
D 
Toluene and Xylene for specified intended use as solvent or diluent or 
thinner for manufacture of paints, varnishes, lacquers and allied materials. 
.... 
Respondent-company failed to produce end-user certificate or any other 
evidence, as required, to the Central Excise authorities while claiming the 
benefit under the notification. The claim was rejected by the authorities and 
the Collector dismissed the appeal of the respondent. CEGA T allowed the E 
appeal of the respondent holding that the end use certificate is not required 
to be produced for claiming the benefit of the notification. Hence the appeal 
by the authorities. 
Allowing the appeal, the Court 
F 
HELD: A bare reading of the notification dated 1st March, 1984 states 
that the Assistan~ Collector of Central Excise has to be satisfied, on proof 
being adduced, that the goods mentioned in the said notification were such 
goods that are used for the intended use specified in the notification. The 
intended use of Benzene, Toluene and Xylene was, inter alia, for use as 
~ 
solvent or diluent or thinner for the manufacture of paints, varnishes, lacquer.: G 
and allied materials. It was incumbent upon the respondent to satisfy the 
officer that there had been actual use of Benzene, etc., in the manufacture 
of paint, varnish, etc. One mode of satisfying the officer was to produce the 
end user certificate which was not done. No other evidence was also led to 
show that the conditions laid down by the said notification of lst March, 1984 H 
333 
334 
SUPREME COURT REPORTS 
[200 I) I S.C.R. 
A had been satisfied. In the absence of any proof with regard to the actual user 
of Benzene, etc., in the manufacture of paint, varnish, lacquer, etc., no relief 
could have been granted to the respondent under the exemption notification. 
·-' 
(335-H; 336-A-B-C) 
B 1991. 
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 2159 of 
~ 
From the Judgment and Order No. 1123/90-C dated 24.10.1990 passed by 
the Customs, Excise and Gold (Control) Appellate Tribunal, New Delhi in 
Appeal No. El Appeal No. 2063/90-C. 
C 
Mukul Rohtagi, Ms. Nisha Bagchi, Ms. Rekha Pandey and P. 
Parmeswaran for the Appellants. 
Pramod B. Agarwala and Ms. Shelly Kumar for Gagrat & Co., (NP) for 
the Respondents. 
D 
The Judgment of the Court was delivered by 
KIRP AL, J. The challenge in this appeal is to the judgment of the 
Customs, Excise and Gold (Control) Appellate Tribunal (CEGAT) which had 
~ 
come to the conclusion that the respondent was entitled to the benefit of an 
exemption notification dated I st March, 1984 insofar as 
it related to 
E manufacture of the goods described therein. 
It is not in dispute that the respondent does not itself manufacture 
Benzene, Toluene and Xylene but is products the same in accordance with 
the procedure set forth in Chapter X of the Central Excise Rules, 1944 which 
allows the removal of the goods without payment of excise duty by the 
F applicant on the applicant satisfying the conditions which would entitle it to 
the exemption. 
By the notification of 1st March, 1984, the effective rate of duty on 
various items mentioned in the said notifications was reduced. The notification 
provides that such reduction of the rate of duty would be subject to the 
G specified intended use or the conditions laid down in the corresponding entry 
in column (5) of the notification. The proviso to this notification with which 
we are concerned in this case reads as follows: 
"Provided that where any such exemption is subject to the intended 
use, the exemption in such case shall be subject to the following 
H 
conditions, namely:-
'"" 
\ 
I 
"_;_ 
¥ 
.... 
C.C.E. v. SHALIMAR CHEMICAL INDUSTRIES [KIRPAL, J.) 
335 
(i) 
(ii) 
that it is proved to the satisfaction of an Officer not below the A 
rank of the Assistant Collector of Central Excise that such goods 
are used for the intended use specified in column

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