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TMI Blog1987 (1) TMI 215X X X X Extracts X X X X X X X X Extracts X X X X ..... e of manufacture of aluminium to gain the benefit under Notification No. 201/79-CE amended by Notification No. 105/82-CE which provides for duty exemption on goods in the manufacture of which any goods falling under Item 68 have been used as raw materials or component parts. The exemption is from so much of the duty of excise as is equivalent to the duty of excise already paid on the raw materials or component parts. The reasons he gives for holding that the cryolite, aluminium, flouride and others are not raw materials are reproduced below :- The term raw material is not defined in the Central Excises and Salt Act, Central Excise Rules or Notification No. 201/79 (as amended). Therefore, we shall have to consider the popular meaning of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inal product, the caustic soda. The discussions by the Asst. Collector are sound; but in the context of the problem, they lead to even greater problems, for which his reasoning will provide no solution. It is quite correct that crude petroleum is the raw material from which naphtha is obtained; and naphtha is the raw material from which benzene, toluene, xylene are obtained. It is also correct to say that yarn is the raw material for the manufacture of cloth, and that yarn is a constitutent of the cloth. 3. However, by this reasoning, no exemption can be given under notification No. 201/79-CE. Naphtha does not fall under Item 68 nor does yarn. For the matter of that, most of the goods in the tariff do not have for their raw materials go ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... able without the use of these materials but this only is not sufficient to allow the party to avail set-off of duty paid on these materials against the duty payable on aluminium . There is no further need to labour the point further or to establish use of these goods; but it will be wise to briefly explore the function of these materials. The Assistant Collector has given useful hints. 5. Lime is added to and mixed with bauxite before digestion with caustic soda for the control of phosphates, sulphates and carbonates contained as impurities in the bauxite and for the in-plant causticisation of liquor. It also helps in the separation and settling all red mud from the liquor. Lime is thus consumed in the manufacture of aluminium oxide. On b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e it? 8. In his own way, the Assistant Collector is not incorrect and his ratiocination would be tolerable if the matter stopped there. But it does not stop there; it begins there: if one took just the alumina, one would have a long, long wait for the aluminium to come out, and even then it would not. The cryolite borax, lime are necessary to the reduction and decomposition of the alumina to free the metal, aluminium, to a recoverable state. And come to it, the Assistant Collector does not say if he allowed exemption on the aluminium on account of the aluminium oxide - evidently not, the reason, perhaps being that duty under Item 68 was not paid on the aluminium oxide. 9. Use of these materials is inescapable and the manufacture of alum ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r this section for such action. This section deals with any duty of excise which has not been levied or paid or has been short levied or short paid or erroneously refunded. The credit held to be wrong by the Assistant Collector are not duties of excise which have not been levied or which have been short levied or short paid, and this Assistant Collector has no authority to recover duty on the cryolite, lime, borax, aluminium etc. because these are not goods whose assessment he has any powers over. If any duty on these goods is short levied or short paid, the Assistant Collector at the factory where they were made is the only authority which can issue demands under Section 11A. We are not even old that there were any short payment or short ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ned brother, Shri H.R. Syiem. I may also add that the Tribunal in 1985(21) E.L.T. 901 = 1985(6) ETR 38 (Collector of Central Excise, Bhubaneswar v. Titaghur Paper Mills) has held that there is no authority to say that an input or raw material must go directly into the finished product. As long as it is consumed and utilised in a way that results or helps in the production or manufacture of the article in which the system is engaged, it is a raw material and is an input for that finished product. That was also a case concerned with the exemption given under Notification No. 201 of 1979. In view of the reasonings stated by the learned brother and also in the light of the prior decision of the Tribunal, I agree that the departmental appeal sho ..... X X X X Extracts X X X X X X X X Extracts X X X X
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