1. The central question is as regards interpretation of a provision for exemption contained in exemption notification as per Annexure 'A' whereby exemption is granted from payment of excise duty in respect of skimmed milk powder falling within item 1B of the First Schedule to the Central Excises and Salt Act, 1944 provided it is proved to the satisfaction of the Assistant Collector of Central Excise that such skimmed milk powder is intended for use for the regeneration of the liquid milk. The relevant portion reads thus :-
'......the Central Government hereby exempts from the whole of duty of excise leviable thereon, such quantities of skimmed milk powder, falling under Item No. 1B of the First Schedule to the Central Excises and Salt Act 1944 (1 of 1944) as are used for the regeneration of liquid milk within the premises of the same factory of production of the skimmed milk powder :
Provided that where such use is elsewhere than in the factory of production, the exemption shall also be allowable, if :- (i) it is proved to the satisfaction of the Assistant Collector of Central Excise that such skimmed milk powder is intended for use for the regeneration of liquid milk.'
2. In the present case the petitioners are manufacturing ice-cream from the skimmed milk powder purchased by them. They claim exemption on the ground that in the course of processing the skimmed milk powder used by them has to be liquified at the intermediary stage. The scheme of exemption as per the notification apparently is to grant it when the metamorphosis from milk-to-skimmed milk-to-liquid milk. Exemption is, however, being claimed by the petitioner when the metamorphosis is from milk-to-skimmed milk-to-ice-cream (after liquifying skimmed powder at an intermediary stage on the premises of the ice-cream manufacturer). There is no need to search for a secret code in order to decipher the underlying purpose of granting exemption. It is manifestly clear viz. to augment the supply of liquid milk so that the poor can supply to their children atleast fat extracted milk at a price within their reach. Otherwise why not grant unqualified exemption to 'skimmed milk' without adding any rider If such a rider is not added, skimmed milk would be entitled to exemption regardless of whether the ultimate product is ice-cream or Barfi or some other product. But the rider is added purposefully so that skimmed milk is regenerated into liquid milk, and secondly it must be so regenerated into liquid milk within the very premises of the factory, or when the Assistant Collector is satisfied that it is for 'use' for regeneration of liquid milk. Why should there be insistence on regenerating on the very premises and reassuring that powder is regenerated into liquid milk if it is done elsewhere Just whim and caprice or with the avowed object that it must augment the supply of liquified milk for the society The answer is so obvious that it need not be articulated. The insistence as regards regeneration on the very premises or elsewhere leaves no room for the argument that skimmed milk is entitled to exemption whatever be the ultimate product so long as for the ultimate product one has to liquify the power. In our opinion, what was born as milk and re-born as skimmed milk powder would be entitled to exemption only when it is again re-born as liquid milk for consumption in the last stage of its journey from milk to milk and certainly not if it is ultimately re-born as ice-cream though on its journey to the destination it is incidentally liquified on its way. A grievance was made above issuance of a Tariff advice. Learned Counsel has placed a Circular as per Annexure 'Q' wherein Clause 6 reads as under :-
'However, as already stated in the Board's letter dated 20-3-1970 quoted above, the quasi-judicial authorities are free to differ with the Tariff advice.'
We, therefore, see no merit in the contention that the Excise authorities will not consider the question with an open mind. What is more, since the matter has been argued on merits and we do not uphold the interpretation canvassed by the petitioners on merits, in any view of the matter the petition must fail.
3. Learned Standing Counsel has assured us that notwithstanding the outcome of the petition the order passed by us at the interim relief stage will be complied with and the said arrangement as regards the quantity covered by C.T. 2 certificate for the period upto December 31, 1982 will not be disturbed.
In the result, petition is rejected.