1985 (8) TMI 203 - AT - Central Excise

Summary

Issues:
1. Interpretation of Notification No. 201/79 regarding the classification of carbon electro-paste.
2. Determining whether carbon paste used in the manufacture of electrodes for calcium carbide qualifies as a raw material under the notification.

Analysis:
1. The case involves a dispute over the classification of carbon electro-paste under Notification No. 201/79. The Asstt. Collector accepted the plea that the paste was entitled to the benefit of the notification when used in the manufacture of calcium carbide. The Collector (Appeals) upheld this decision, citing a previous judgment related to a different industry. The appellant argued that the process of manufacturing calcium carbide was distinct from that of iron/steel, and the earlier decision should not apply. Reference was made to various court decisions and tribunal orders to support the contention that carbon paste is not a raw material but a finished product when used in the manufacturing process.

2. During the hearing, the appellant referred to a previous Tribunal decision in the case of "Ferro Alloys Corporation Ltd. v. Collector of Central Excise, Guntur," where it was held that carbon paste used in the manufacture of ferro alloys was not considered a raw material. The appellant emphasized that carbon paste used in electrodes for calcium carbide had no direct relation to the final product. In response, the respondent cited the Tribunal's decision in the case of "Rajalakshmi Paper Mills Pvt. Ltd. v. Collector of Central Excise, Madurai," which emphasized interpreting the term "raw material" based on the specific circumstances of each case. The respondent provided detailed information on the chemical reactions involved in the manufacturing process of calcium carbide to support the argument that carbon paste was essential for producing quality calcium carbide.

3. The Tribunal noted that carbon paste is used in electrodes primarily as a means of delivering current in the manufacturing process. Drawing parallels to a previous case involving ferro alloys, the Tribunal concluded that carbon paste was not a source of carbon in the manufacturing process and could not be classified as a raw material under Notification No. 201/79. The Tribunal reasoned that the mere use of electrodes did not automatically qualify the carbon paste as a raw material, as the electrodes were primarily functional devices. Therefore, the Tribunal set aside the orders of the lower authorities and denied the claim that carbon paste used in the manufacture of electrodes for calcium carbide was eligible for the benefits of the notification.