1992 (7) TMI 213 - AT - Central Excise

Summary

Issues:
- Admissibility of set-off of duty on Oxalic Acid used as raw material
- Interpretation of Notification No. 201/79 dated 4-6-1979
- Eligibility for set-off in cases where the material acts as a catalyst but does not form part of the final product

Analysis:
The appeal before the Appellate Tribunal CEGAT, New Delhi involved a dispute regarding the admissibility of the set-off of duty on Oxalic Acid used as raw material by the appellants in the manufacture of their excisable goods. The Collector of Central Excise, Vadodara filed the appeal against the order passed by the Collector of Central Excise (Appeals), Bombay. The appellants were availing the set-off of duty in accordance with Notification No. 201/79 dated 4-6-1979 for the Oxalic Acid used in the production process. The Assistant Collector confirmed a demand for duty, leading to an appeal by the respondents before the Collector of Central Excise (Appeals), who allowed the appeal based on previous tribunal decisions. The department then appealed to the CEGAT.

The key issue revolved around whether Oxalic Acid, acting solely as a catalyst in the manufacturing process of Phenol Formaldehyde Resin and PF Moulding Powder, without being a component of the final products, was eligible for the set-off of duty as per Notification No. 201/79 dated 4-6-1979. The Revenue argued that Oxalic Acid, despite not being part of the final product, qualified for the set-off as it played an essential role in expediting the chemical process and formation of the finished goods. Reference was made to a Supreme Court decision regarding the eligibility of materials that act as catalysts but do not directly contribute to the final product.

Upon examination of the case record and submissions from both sides, the Tribunal referred to a Supreme Court judgment regarding the interpretation of the term "raw material" in the context of excise duty set-off. The Supreme Court's ruling emphasized that even if a material is consumed or burnt up during the manufacturing process and does not retain its identity in the final product, it can still be considered a raw material if it is essential for the manufacturing process. Applying this principle, the Tribunal concluded that Oxalic Acid, acting as a catalyst in the production process, was indeed eligible for the set-off of duty as per the relevant notification.

In light of the legal precedents and the essential role played by Oxalic Acid in the manufacturing process, the Tribunal rejected the department's appeal and upheld the decision of the Collector of Central Excise (Appeals). The appeal was dismissed, and the cross objection was disposed of accordingly, affirming the eligibility of Oxalic Acid for the duty set-off under Notification No. 201/79 dated 4-6-1979.