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TMI Blog2007 (10) TMI 303X X X X Extracts X X X X X X X X Extracts X X X X ..... ipulated conditions that the goods have been manufactured wholly from the raw materials produced or manufactured in India. According to the company it procured the raw materials from domestic manufacturers in India and also imported (1) Carboxymethyle Cellulose which is used for sizing of single yarn to give strength to the yarn during weaving after which the woven towels are washed to remove completely the sizing materials and (2) Ultra fresh N.M. which is used for anti-bacteria and anti-fungus treatment of terry towels. The Commissioner (Appeals) had confirmed the demand of duty on the ground that the sizing materials imported by the company is raw material and as imported raw material has been used, the benefit of Notification No. 8/97-C.E. is not available. 4. According to learned counsel for the appellant the sizing material imported is not raw material but is a consumable as per definition given in para 3.13 of the EXIM Policy. According to the definition of 'Consumable', it means any item which participates in or is required for manufacturing process but does not form part of the end-product. Items which are substantially or totally consumed during manufacturing process wil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the facts and circumstances of that matter and no general proposition of law was being laid down. In that case this Court was concerned with Sodium Sulphate which was burnt up in the process of manufacture and other chemical reaction. Additionally, in Ballarpur's case (supra) the manufacturer was not 100% EOU importing any material unlike the present appellant-company which is 100% EOU importing material classified under the EXIM Policy as consumable. 6. Stand of the Department-respondent was that imported sizing material was used by the assessee in the manufacture of impugned product and the process of sizing is essential process during the course of manufacture of terry towel because it increased the strength of the yarn and the fibre and thus improves the weaving of the yarn. Therefore, the sizing material is an essential ingredient for weaving of terry towel. Reliance was placed on the decision of this Court in Ballarpur's case (supra) to contend that one of the valid tests to determine whether the ingredient qualifies to be called raw material could be that ingredient should be so essential for the chemical processes culminating in the emergence of the desired end-product. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he appellant filed reply to the aforesaid show cause notice and, thereafter after hearing the learned counsel for the parties the Commissioner, Central Excise and Customs, Indore by order dated 23-6-1999 held that since the raw material has not been defined specifically and also nothing has been brought on record to establish that imported 'Indigo pure' is a raw material known in common trade parlance therefore, the 'Indigo pure' cannot be termed as raw material for production of Denim fabrics and dropped the show cause notice against which the Revenue filed a joint appeal before the CEGAT. 12. The CEGAT allowed the appeal filed by the Revenue by order dated 30-1-2001 and set aside the order passed by the Commissioner on 26-3-1999 and considered the case in the light of finished product and has held that 'Indigo pure' which has gone into the production of the finished product is thus the raw material and remanded the case to consider the points of limitation and the quantum of duty, as these points were not considered as the entire proceedings were dropped, against which the appellant-Company has filed the writ petition challenging the aforesaid order of the CEGAT. The dispute rel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... so the question was whether the use of small quantity of imported dye in bringing the end-product into existence, even in that case it can be treated that the finished product has come into existence wholly from cotton. It was held that for the manufacture of denim the basic raw material and the finished product cannot be treated as wholly produced or manufactured from cotton. Therefore, placing reliance on Ballarpur's case (supra) it was held that the finished product is not wholly from basic raw material i.e. cotton but it has to be treated that the dye is also a raw material which is imported. 15. It is to be noted that cost of dye varied between 2 and 2.5% of the total production cost. The denim is manufactured from cotton and not from indigo. The conditions for getting the benefit of the Notification is that the end-products should be wholly manufactured from the raw material produced and sold in India. 16. It is to be noted that dominant ingredient test has not been applied in the instant case; so also the effect of value addition. In Ballarpur's case (supra) it was held in para 19 as follows : "We are afraid, in the infinite variety of ways in which these problems present ..... 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