1993 (11) TMI 123 - AT - Central Excise

Summary

Issues:
1. Interpretation of Notification No. 201/79 dated 4-6-1979 regarding the admissibility of duty set-off on solvents used in manufacturing PVC film and sheets.
2. Determination of whether solvents used in diluting printing ink for printing PVC sheets qualify as "inputs" under the said notification.
3. Assessment of the legal and proper nature of the orders issued by the Assistant Collector and the subsequent appeal process.
4. Application of the criteria for defining "raw-material" under Notification 201/79 based on relevant case law and judicial precedents.

Detailed Analysis:
1. The appeal before the Appellate Tribunal CEGAT, New Delhi involved a dispute regarding the Collector of Central Excise, Bombay-III challenging the admissibility of duty set-off claimed by M/s. Caprihans India Ltd. for solvents used in manufacturing PVC film and sheets under Notification No. 201/79 dated 4-6-1979.
2. The issue revolved around whether the solvents, namely MIBK-NOCIL, TOLOENE - INDIAN OIL, and CYCLO HEXANE - GSFC, used for diluting printing ink in the process of printing PVC sheets could be considered as "inputs" eligible for duty set-off under the notification.
3. Initially, the Assistant Collector, Central Excise, Dn. Thane-I had dropped the case proceedings, deeming the solvents as covered by the notification. However, upon review, the Collector, Central Excise, Bombay-III directed an appeal, leading to a decision by the Collector of Central Excise (Appeals), Bombay, who upheld the use of solvents as inputs based on a Tribunal decision and relevant legal principles.
4. The Tribunal considered the definition of "raw-material" under Notification 201/79, citing the Supreme Court decision in Collector of Central Excise v. Ballarpur Industries, which emphasized the essentiality and indispensability of an ingredient in the manufacturing process for it to be classified as raw-material, even if it is consumed or burnt up in the process and not present in the final product.
5. The Manager Excise of the respondents argued that solvents were necessary for diluting printing ink to maintain correct viscosity, citing a flow chart and legal precedents like the Ballarpur Industries case. The Tribunal agreed, emphasizing the importance of the solvents in the manufacturing process of printed PVC sheets/films, thus making them eligible for exemption as inputs under the notification.

In conclusion, the Tribunal rejected the appeal, affirming the decision that the solvents used in the printing process for PVC sheets/films qualified as inputs under Notification 201/79, based on their essential role in the manufacturing process as established by legal principles and precedents.