COMMNR. OF CENTRAL EXCISE, MUMBAI vs M/S. NATIONAL ORGANIC CHEMICAL INDST.LTD

The Supreme Court addressed the applicability of Exemption Notification No. 217/86 under the Central Excise Tariff Act, 1985, concerning the captively consumed ethylene and propylene. The Court held that while ethylene and propylene used in the manufacture of products under chapter 29 are exempt from excise duty, those used for products under chapter 27 are not exempt and thus attract duty. The judgment affirmed the issuance of show-cause notices for the duty on ethylene and propylene used in the manufacture of methane and ethane, establishing the principle that exemptions are strictly construed based on the classification of goods.