2007 (3) TMI 165 - AT - Central Excise

EOU Appellant (100% EOU) contended that epoxy resin and agar is used only when there are certain craks in the granites(final product) and not in all the cases, so they are not considered as raw material but as a consumables Tribunal allowed the said product as consumables

Summary

Issues:
1. Interpretation of the definition of raw materials and consumables under various exemption notifications for 100% EOU.
2. Whether epoxy resin and agar used in the manufacturing process of polished granite slabs qualify as raw materials or consumables.
3. Applicability of relevant judgments and clarifications in determining the nature of epoxy resin and agar.
4. Time-barred nature of the show cause notice issued for demanding duty.
5. Consistency in decisions of different Commissioners regarding the classification of epoxy resin and agar.

Analysis:
1. The appeals involved a common question of law and fact regarding the utilization of exemptions by the appellants as 100% EOU. The issue revolved around the interpretation of raw materials and consumables under specific exemption notifications.
2. The contention was whether epoxy resin and agar, used in the manufacturing process of polished granite slabs, should be classified as raw materials or consumables. The Department argued that these items were not eligible for concessional duty rates under certain notifications as they were considered raw materials. The appellants argued that these items were consumables based on their usage and the final outcome of the product.
3. The appellants relied on various judgments, including the Apex Court's decision in CCE v. Ballarpur Industries Ltd., to support their claim that epoxy resin and agar should be treated as consumables. They also referred to clarifications by the Development Commissioner and CBEC Circulars to strengthen their argument.
4. The issue of the show cause notice being time-barred was raised by the appellants, stating that the notice issued for the period from September 2001 to May 2004 was beyond the permissible time limit.
5. The judgments delivered by different Commissioners varied in their classification of epoxy resin and agar. While some upheld the demands, others set them aside based on the nature of the items and their usage in the manufacturing process. The Tribunal ultimately ruled in favor of the appellants, considering the technical aspects, previous judgments, and clarifications provided by relevant authorities.

Overall, the Tribunal found that the items in question, epoxy resin and agar, should be treated as consumables based on their usage in the manufacturing process and the fact that they did not remain in the final product. The judgments and clarifications supported this classification, leading to the dismissal of the revenue's appeal and the allowance of the parties' appeals.