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Issues: Competency of Collector (Appeals) to attach a condition of actual use of goods before extending exemption, interpretation of notification regarding end use condition, applicability of Supreme Court judgment, comparison with a previous Tribunal decision, multiple uses of Hydrazine Hydrate, relevance of subsequent exemption notification.
In this judgment by the Appellate Tribunal CEGAT, New Delhi, the main issue revolved around the competency of the Collector (Appeals) to impose a condition of actual use of goods, specifically Hydrazine Hydrate, as a drug-intermediate before granting exemption under notification No. 234/82-C.E. The appellant's counsel did not appear, and the case proceeded based on written submissions. The learned DR argued citing the Supreme Court's judgment in Collector of Central Excise v. Andhra Sugars, emphasizing the implied requirement of end use for products like Hydrazine Hydrate. The appellant contended that the end-use condition was not mentioned in the notification itself and relied on a previous Tribunal decision where a similar condition was deemed unwarranted. Upon careful consideration, the Tribunal found that Hydrazine Hydrate had multiple uses beyond being a drug-intermediate, such as in agriculture, textiles, and chemicals. The Collector (Appeals) was justified in applying the end-use condition, as upheld by the Supreme Court, due to the varied applications of the product. The Tribunal distinguished a previous decision where goods were pharmacopoeia grade and considered drugs, hence exempt from such conditions. Since Hydrazine Hydrate was not of pharmacopoeia grade and had diverse uses, the end-use condition was deemed appropriate in this case. Addressing the argument regarding a subsequent exemption notification (172/83-C.E.), the Tribunal clarified that changes in government policies necessitated different treatment for specified chemicals like Hydrazine Hydrate. While acknowledging Hydrazine Hydrate as a drug intermediate, the Tribunal held that the end-use as a drug intermediate was inherent in the earlier notification (234/82) to qualify for exemption. Therefore, the subsequent notification did not alter the requirement of end use under the original notification. Ultimately, the appeal was rejected based on the multiple uses of Hydrazine Hydrate and the necessity of the end-use condition for availing the exemption under the relevant notification.
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