1995 (6) TMI 184 - AT - Central Excise

Summary

Issues:
Whether Carbon Paste used in the manufacture of Calcium Carbide is entitled to benefit of exemption under Notification No. 201/79-C.E.

Analysis:
The case involved three appeals, with two filed by M/s. Industrial Chemicals and Monomers Ltd., and the other by M/s. Gulf Olefines (P) Ltd., regarding the entitlement of Carbon Paste used in manufacturing Calcium Carbide to an exemption under Notification No. 201/79-C.E. The appellants claimed that Carbon Paste, although used for conveying electricity to an arc furnace, was also a raw material in the manufacture of Calcium Carbide. The Assistant Collector and Collector (Appeals) rejected this claim, citing a previous Tribunal decision that Carbon Paste used in an electrode for delivering current in the Calcium Carbide manufacturing process cannot be considered a raw material. The appellants argued that Carbon Paste was integral to the final product and should be eligible for the exemption based on various technical and legal precedents.

The appellants' representatives contended that Carbon Paste should be considered a raw material as it was consumed in the manufacturing process of Calcium Carbide, contributing to the final product. They referenced technical literature and legal cases supporting the inclusion of consumed materials in the exemption. They also highlighted the distinction between a device and a raw material, emphasizing the role of Carbon Paste in the chemical reaction to form Calcium Carbide. The Department representative argued that Carbon Paste was used for electricity conduction and was incidentally absorbed in the manufacturing process, thus not qualifying as a raw material based on previous decisions and case law.

After considering both parties' arguments and reviewing relevant case law, the Tribunal concluded that Carbon Paste used in the manufacture of Calcium Carbide was entitled to the benefit of the exemption under Notification No. 201/79-C.E. The Tribunal noted that Carbon Paste was not only used but also consumed in the manufacturing process, contributing to the final product. Citing Supreme Court decisions and the principle that inputs used in an integrated manufacturing process should be treated as raw materials, the Tribunal ruled in favor of the appellants. The Tribunal found that the Department's denial of the exemption based on Carbon Paste not being a raw material was unjustified, and the appellants were entitled to the benefit under the notification. Consequently, all appeals were allowed in favor of the appellants.