1998 (10) TMI 218 - AT - Central Excise

Summary

Issues:
1. Interpretation of Notification No. 201/79-C.E. regarding the classification of carbon paste as a raw material.
2. Application of judgments by different tribunals and the Supreme Court to determine the eligibility of carbon paste as a raw material.
3. Conflict between judgments of different tribunals regarding the classification of carbon paste.

Issue 1:
The appeal involved the interpretation of Notification No. 201/79-C.E. to determine whether carbon paste used in the manufacture of ferro silicon qualifies as a raw material. The Collector (Appeals) held that carbon paste does not fall under the definition of raw material as per the notification, relying on the meaning of "raw material" from Webster's New Collegiate Dictionary. However, the appellants argued that the Supreme Court's judgments in various cases, including CCE v. Eastend Paper Industries Ltd., supported their claim that carbon paste should be considered a raw material based on its essential role in the manufacturing process.

Issue 2:
The appellants cited the judgment in the case of M/s. Sandur Manganese & Iron Ores Works Ltd. and various Supreme Court decisions to argue that carbon paste should be treated as a raw material. They emphasized the importance of carbon paste in the manufacturing process of ferro silicon, drawing parallels with other cases where similar substances were considered raw materials. The Tribunal agreed with the appellants, noting that the earlier judgment in the case of Sandur Manganese & Iron Ores Ltd. aligned with the principles laid down by the Supreme Court, thus entitling carbon paste to the benefit of set off as an input.

Issue 3:
The judgment highlighted a conflict between the decisions of different tribunals regarding the classification of carbon paste. The Bench referred to a previous judgment by the same Bench in the case of Ferro Alloys Corporation Ltd., which held that carbon paste could not be considered a raw material. However, the Tribunal in the current case distinguished this judgment and upheld the earlier decision in the case of Sandur Manganese & Iron Ores Ltd., emphasizing the essential role of carbon paste in the manufacturing process of ferro silicon. The Tribunal concluded that carbon paste qualifies for the benefit of set off as an input, in line with the Supreme Court's principles on the definition of raw materials.

In conclusion, the Tribunal set aside the impugned order and allowed the appeal, determining that carbon paste is entitled to the benefit of set off as an input in the manufacture of Ferro Silicon/Ferro Alloys, based on the interpretation of Notification No. 201/79-C.E. and the application of relevant judgments by the Supreme Court and different tribunals.