Civil Appeal No. 1130 of 2003, Supreme Court of India, decided 6 November 2008 (Dalveer Bhandari, J.; bench included Harjit Singh Bedi, J.). Central excise - exemption under Exemption Notification No.217/86 CE dated 2.4.1986 under the Central Excise Tariff Act, 1985 (chapters 27 and 29). Respondent M/s National Organic Chemical Industries Limited manufactured ethylene and propylene (chapter 29) by cracking raw naphtha, during which methane and ethane (chapter 27) automatically emerged as by-products; part of the ethylene and propylene was captively consumed as a refrigerant in the process of separation. The Commissioner of Central Excise confirmed duty demands, penalty and interest (order in original dated 12.7.1996), taking the view that exemption was available only where the inputs were captively consumed in manufacture of finished goods falling under chapter 29; the Tribunal allowed the assessee's appeal (order dated 20.05.2002, No. C-II/1570/WZB/2002, West Zonal Bench, Mumbai), and the Revenue appealed. Held: (i) the Tribunal's finding that the ethylene and propylene used as refrigerant were used in or in relation to the manufacture of the same goods stands - the inevitable and automatic emergence of ethane and methane is by itself no ground for denying the exemption, since the respondent could not have manufactured ethylene and propylene without manufacturing those by-products and the identical quantity was simultaneously used in the manufacture of ethylene and propylene; (ii) the proposition that in case of ambiguity the benefit of doubt must go to Revenue is correct but has no application to the facts; (iii) appeal dismissed, parties to bear their own costs. Referred to: Novopan India Ltd. (1994) Supp 3 SCC 606; Mahaan Diaries (2004) 11 SCC 798; Rukmani Pakkwell Traders (2004) 11 SCC 801; Tata Iron and Steel Co. Ltd. (1977) 1 ELT 61; Indian Farmers Fertiliser Cooperative Ltd. (1996) 86 ELT 177; Indian Petrochemicals Corporation Ltd. (1997) 92 ELT 294; National Organic Chemical Industries Ltd. (1997) 89 ELT 643; Doypack Systems (Pvt.) Ltd. (1988) 36 ELT 201; Jawahar Mills Ltd. (2001) 132 ELT 3.
