Judgment

V. BALAKRISHNA ERADI, J.:- This appeal by special leave is directed against an Order dated August, 3, 1978 passed by the Government of India under Section 36 of the Central Excises and Salt Act. 1944 (hereinafter referred to as the Act). rejecting a Revision Petition filed by the present appellant and confirming the view taken by the Appellate Collector of Excise. Bombay, that the appellant, herein is not entitled to the benefit of the exemption from duty of excise conferred by a Notification No. 4/68-CE dated January 20, 1968.

2. The appellant-Company which has its factories at Sion East and Andheri East in Bombay is engaged in the manufacture of various process chemicals required for the Textile Industry Amongst the process chemicals so manufactured by them are substances known as emulsifiers and wetting out agents. These products fall within the scope of Tariff Item 15-AA of the First Schedule to the Act. which reads:

Organic Surface Active Agents (other than soap)) : Surface Active preparations and washing preparations. whether or not containing soap."

For use as raw-material for the manufacture of the emulsifiers/wetting out agents. the appellant-Company had purchased a total quantity of 1.64.500 kgs. of organic surface active agents from another company called The Industrial General Products Private Limited. The aforesaid organic surface active agents sold to the appellant by the Industrial General Products Private Limited had not been subjected to the levy of excise duty inasmuch as the said supplier Company was eligible for exemption from payment of excise duty on account of the fact that the goods were manufactured by it without the aid of power.

3. Emulsifiers/wetting out agents etc. intended for use in any industrial process were exempted from the levy of duty under Entry 15-AA of the First Schedule to the Act. subject to certain conditions, by a Notification dated January 20. 1968 issued by the Government of India. The relevant part of that Notification is in the following terms:

"The Central Government has exempted the excisable goods specified in Column (2) of the Table hereto annexed and falling under this Item from the whole of the duty of excise leviable thereon subject to the conditions laid down in the corresponding entries in Column (3) of the said Table.

TABLE

Sl. No. Description Conditions

(1) (2) (3)

1. ... ... ... ...

2. ... ... ... ...

3. ... ... ... ...

4. Emulsifiers, wetting out agents, softners and other like preparations intended for use in any industrial process. If in respect of surface active agents used in the manufacture of such emulsifiers, wetting out agents, softners and other like preparations the appropriate amount of the duty of excise or the additional duty under S 2A of the Indian Tariff Act, 1934 (32 of 1934), has already been paid or where such surface active agents are purchased from the open market on or after the 20th day of January, 1968."

4. It is common ground that the organic surface active agents used by the appellant as raw-material for the manufacture of emulsifiers/wetting out agents were purchased by it subsequent to the 20th day of January, 1968. The Central Excise authorities originally treated the manufactured product. namely the emulsifiers etc. as exempt from levy of duty by virtue of the Notification dated January 20, 1968. But, subsequently, by a notice dated August 6, 1974, issued by the Superintendent of Central Excise Inspection Group No. 1. Bombay Division V. the appellant-Company was directed to show cause why an amount of Rupees 1,21,709.57 should not be recovered from the Company by way of excise duty in respect of the period August, 1973 to February, 1974 on the ground that the said amount represented escaped duty in respect of the emulsifiers/ wetting out agents manufactured by the petitioner-Company during the afore said period.

5. In reply to the said notice, the appellant-Company objected to the said demand contending that it was entitled to the benefi