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TMI Blog1989 (9) TMI 102X X X X Extracts X X X X X X X X Extracts X X X X ..... ld coalesce with the requirement that its utilisation is in the manufacturing process as distinct from the manufacturing apparatus. No substance in the contention of Sri Ganguly that the process in which the Sodium Sulphate was used, was anterior to and at one stage removed from the actual manufacture of paper. Thus the Tribunal was right in its conclusion that Sodium Sulphate was used in the manufacture of papers as "Raw-Material" within the meaning of the Notification No. 105/82-C.E., dated 28-1-1982. Appeal dismissed. - Civil Appeal No. 2882 of 1989, - - - Dated:- 29-9-1989 - M.N. Venkatachaliah, N.D. Ojha and J.S. Verma, JJ. C. Shivappa, Advocate-General (for State of Karnataka), A.K. Ganguli, Senior Advocate (K. Swami and Mrs. Sushma Suri, Advocates, with them), for the appellant. Soli J. Sorabji and O.P. Malhotra, Senior Advocates (Ms. Indu Malhotra, Ms. Auesha Zaidi and Mrs. Nisha Bagchi, Advocates, with them), for the respondent. [Judgment per : Venkatachaliah, J.]. - This appeal, under Section 35-L(b) of the Central Excises and Salt Act, 1944, arises out of and is directed against the Order No. E/1351/88-C, dated 2-12-1988, by the Customs, Excise and Go ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it to the duty paid on "Sodium Sulphate" on the ground that Sodium Sulphate "as burnt-up in the process of manufacture and was not retained in the paper" and that, therefore, it could not be considered "Raw Material" in the manufacture of paper. Accordingly, he caused a notice dated 18-1-1988 to be issued requiring respondent to show cause why the amounts of Proforma-Credit availed of by the respondent for the period between 28-2-1982 and 31-10-1982 should not be recovered. The reason why "Sodium Sulphate" could not be held to be a "raw material" in the manufacture of paper was set out in the notice thus : "...The Proforma Credit claimed and granted in respect of the above-mentioned items from 28-2-1982 to 31-10-1982 is not admissible because these Chemicals are burn out and do not remain in the finished product. The amount of Proforma Credit availed is, therefore, liable to be recovered..." (Emphasis supplied) However, the Assistant Collector of Central Excise, Ambala, by his order dated 27-6-1986 took a different view and held that Sodium Sulphate, even as the other inputs referred to in the said notice, was an essential raw material in the manufacture of paper and attracted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... entral Excise v. Eastend Paper Industries Ltd. [1989 (43) E.L.T. 201 S.C.] : "In J.K. Cotton Spinning and Weaving Mills Co. Ltd. v. Sales Tax Officer [1965 (16) STC 563 (S.C.)], this Court while construing the expression `in the manufacture or processing of goods for sale' in the context of Sales Tax Law, though the concept is different under the Excise Law, has held that manufacture of goods should normally encompass the entire process carried on by the dealer of converting raw materials into finished goods ..." [p. 204] (Emphasis Supplied) and contended that the import of the word "Raw Material", judicially accepted, connotes something more than what is `used' in the manufacture and requires that goods to become "Raw Material" must, either in their original or altered form, endure as a composite element of the end-product. Sri Ganguly submitted that the technical literature and evidence in the case as to the part played by Sodium Sulphate in the chemical technology of paper making suggested two things : First, that Sodium Sulphate was utilised in the preparation of an anterior, intermediate product at the stage of `digestion' of the pulp and did not, therefore, strictly belon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rabjee, for the Respondent, sought to maintain that Sodium Sulphate was an essential chemical ingredient in the chemistry of paper technology and that the fact that the ingredient was actually burnt-up or sublimated in the process and did not retain its identity in the end-product, will not, necessarily, detract from its being a "Raw Material". The relevant test is how essential is the ingredient in the manufacture. Learned Counsel said that in the complexity of the chain of chemical reactions in the manufacturing process, undue emphasis on the search for the identity of any individual chemical ingredient in the final product would be artificial and unrealistic. Sri Sorabjee submitted that authoritative scientific treatises on the paper technology recognise that "Sodium Sulphate" is an essential raw material. Sri Sorabjee referred to the publication of the Food and Agriculture Organisation of the United Nations under the caption "Guide for Planning Pulp and Paper Enterprises" in which the following statement occurs : "For any pulp and paper enterprise a variety of non-fibrous raw materials are requires : water, fuel, power and paper-making chemicals and, for pulp mills, pulping a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h altered form find themselves in the end-product; those which, like catalytic agents, while influencing and accelerating the chemical reactions, however, may themselves remain uninfluenced and unaltered and remain independent of and outside the end-products and those, as here, which might be burnt-up or consumed in the chemical reactions. The question in the present case is whether the ingredients of the last mentioned class qualify themselves as and are eligible to be called "Raw-Material" for the end-product. One of the valid tests, in our opinion, could be that the ingredient should be so essential for the chemical processes cluminating in the emergence of the desired end-product, that having regard to its importance in and indispensability for the process, it could be said that its very consumption on burning-up is its quality and value as raw-material. In such a case, the relevant test is not its presence in the end-product, but the dependence of the end-product for its essential presence at the delivery end of the process. The ingredient goes into the making of the end-product in the sense that without its absence the presence of the end-product, as such, is rendered impossi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ase. Though in many cases it might be difficult to draw a line of demarcation, it is easy to discern on which side of the border-line a particular case falls. Sri Ganguly's insistence, however, serves to recall the pertinent observations of an eminent author on the point. It was said : "....A common form of argument used by counsel in legal cases is to suggest that if the court decides in favour of the opposing counsel's arguments, it will become necessary to draw lines which may be very difficult or impossible to draw. "Where will you draw the line" is, of course, a question which must be faced by a legislator who is actually proposing to lay down lines for all future cases, Out it is not a question which needs in general to be faced by common law courts who proceed in slow stages, moving from case to case...." [See : "Pragmatism and Theory in English Law; page 75; Hamlyn Lectures of 1987] The learned Author recalls Lord Lindley's "robust answer" to the question where will you draw the line? "Nothing is more common in life than to be unable to draw the line between two things. Who can draw the line between plants and animals? And yet who has any difficulty in saying that ..... X X X X Extracts X X X X X X X X Extracts X X X X
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