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TMI Blog1996 (5) TMI 268X X X X Extracts X X X X X X X X Extracts X X X X ..... yline hydrochloride do not form part of final products but are used as solvents. The respondents in their note on use of solvents MIBK and Butanol admitted that it is not possible to get the desired quantity and quality of the crystals without the use of the solvents. From this it is clear that they are used to bring about a change in the manufactured substance and not used in the manufacture of end products. As such the respondents are not entitled to get benefit of Notification No. 201/79, dated 4-6-1979. However, in this case, it is seen that two show cause notices dated 22-4-1985 and 25-1-1985 pertain to the period 1-1-1982 to 21-9-1983 and 1-10-1982 to 30-9-1984, i.e. for the period beyond six months. Further the said show cause notice ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... goes off during drying process. About Butanol, it was explained that Butanol is used to improve the colour of T.C. HCL and also to remove certain impurities. The Department was of the view that these two raw materials are used as solvent in the manufacture of pharmaceuticals and that they were neither inputs nor components in the finished products. Eight show cause notices were issued to the appellants asking them to pay duty on the ground that the input does not form part of the finished product. The Asstt. Collector after considering the submissions made by the appellants held that MIBK and Butanol not only act as input for manufacture of antibiotics but also as factors to improve the quality and standards of the product and therefore, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ss of six months are time-barred; that the provisio to Section 11A of the CESA, 1944 was not applicable in their case as there was no fraud, misrepresentation, collussion or suppression of the facts with an intent to evade payment of duty; that RT 12 returns in respect of the said products were finalised. The learned Counsel for the appellants submitted that in the case of Sandhur Manganese and Iron Ores Ltd. v. C.C.E., Bangalore reported in 1985 ECR page 862, the South Regional Bench of this Tribunal had held The proposition that a raw material must be physically present in the final product cannot be taken as an inevitable and invariable rule . The learned Counsel also referred to the Hon ble Bombay High Court judgment on the question of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d held : If a substance or a chemical is used and consumed in order to produce or to impart it certain qualities and properties, it can be said that chemical or substance was an input or a material in the manufacture of the paper, which aid and contribute directly to the generation of the finished paper. In the instant case, caustic soda is used in bleaching paper pulp, the lime is also used to make bleach liquor is again used in the manufacture of paper. Malt paper is used in the recovery of caustic soda for spent liquor which is used in the bleaching, treating the pulp, salt cake is very much a raw material and input in the manufacture of the paper that comes out at the end. Similarly, sulphamic acid is used to reduce the degradation o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... so integrally connected with the ultimate production of goods that but for that process, manufacture or processing of goods would be commercially inexpedient, goods required in that process would, in our judgment, fall within the expression in the manufacture of goods. ] [In our judgment, if a process or activity is so integrally related to the ultimate manufacture of goods so that without that process or activity manufacture may, even if theoretically possible, be commercially inexpedient, goods intended for use in the process or activity as specified in Rule 13 will qualify for special treatment. This is not to say that every category of goods `in connection with manufacture of or `in relation to manufacture or which facilities the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... submitted that since MIBK and Butanol did not participate in the action or in the processing of the final product, therefore, they cannot be termed as inputs. The learned DR reiterated the findings of the lower authorities. 5. Heard the submissions of both sides. On careful consideration of the process of manufacture of the final product, we find that MIBK and Butanol are used to extract the antibiotic and water phased in the extraction department and then the antibiotics which are final product in the instant case are precipitated, the trace of MIBK which might be observed at intermediate stage ultimately off during drying process, Butanol is used to improve the colour of antibiotics and also to remove certain impurities. Having regard ..... X X X X Extracts X X X X X X X X Extracts X X X X
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