2014 (3) TMI 157 - AT - Central Excise

Denial of benefit of concessional rate of duty - Notification No.13/98-CE dated 2.6.98 and 23/2003-CE dated 31.3.2003 - use of imported chemicals being calcium carbide for ripening of apples - whether the use of chemicals i.e. calcium carbide and use of accelerator i.e. Pectin Enzymes in the manufacture of apple juice concentrate would amount to use of imported raw materials hitting the condition of the notifications - Held that - if the imported products used in the manufacture of final products are in the nature of catalyst or consumable , the same would not be hit by the condition of the use of indigenous raw materials in the notification - calcium carbide was used by the appellant for ripening of the apples, which admittedly is a process prior to the extraction of juice. The said ripening of the apples can be achieved even on the basis of natural condition. As such it can be concluded that such use of chemicals for ripening of apples is only to accelerate the process. Further, the use of Pectin Enzymes for extraction of juice has again to facilitate the process of extraction of juice which can otherwise be achieved without the use of the said Enzymes. As such, the said two products are required to be considered as consumables, in which case, the same would not amount to use of raw materials thus violating the condition of the notification - Following decision of I G Petrochemicals Ltd. vs. C.C.E., Belapur 2005 (12) TMI 199 - CESTAT, MUMBAI - Decided against Revenue.

Summary

Issues:
Interpretation of Notifications No.13/98-CE and 23/2003-CE regarding concessional rate of duty for final product manufactured from indigenous raw materials.

Analysis:
The judgment involves the interpretation of Notifications No.13/98-CE and 23/2003-CE, which provide a concessional rate of duty for products manufactured wholly from indigenous raw materials. The issue revolves around whether the use of imported chemicals like calcium carbide and Pectin Enzymes in the manufacturing process of apple juice concentrate violates the conditions of the notifications, disentitling the assessee from the benefit of the concessional rate of duty.

The Revenue contended that the use of imported ripening chemicals and Pectin Enzymes constitutes the use of imported raw materials, thus challenging the eligibility of the assessee for the concessional rate of duty. On the other hand, the assessee argued that the use of catalysts and consumables, such as the mentioned chemicals, does not amount to the use of imported raw materials as long as the primary raw material, in this case, apples, is indigenous.

The Tribunal referred to various precedents to determine the issue. It cited cases where the use of catalysts and consumables in the manufacturing process did not disqualify the product from being considered as manufactured from indigenous raw materials. The Tribunal emphasized that if the imported products are in the nature of catalysts or consumables, they do not violate the condition of using indigenous raw materials as per the notifications.

In the specific case at hand, the Tribunal found that the use of calcium carbide for ripening apples and Pectin Enzymes for juice extraction were akin to consumables that facilitated the manufacturing process but were not integral raw materials. Therefore, the Tribunal concluded that these imported chemicals did not amount to the use of imported raw materials, allowing the assessee to avail the benefit of the concessional rate of duty as per the notifications.

In light of the above analysis and legal precedents, the Tribunal allowed the appeals filed by the assessee, granting them consequential relief, and rejected the appeal by the Revenue. The judgment clarified that the use of catalysts or consumables in the manufacturing process does not disqualify the product from being considered as manufactured from indigenous raw materials, aligning with the interpretations from previous legal decisions.