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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 ..... - Leave granted in SLP (C) Nos. 9698/2005 and 8595-8596/2005. 2. Challenge in these appeals is to the judgment of the Customs, Excise and Gold (Control) Appellate Tribunal, New Delhi (in short 'CEGAT') disposing of appeals filed by the appellant-company. Challenge before the CEGAT was to the order passed by the Commissioner (Appeals). CEGAT granted stay of the recovery of duty, and took up the appeals for disposal of merits. The appellant-company had challenged the order passed by the Commissioner of Central Excise (Appeals) Jaipur. 3. Background facts in a nutshell are as follows : Appellant-company is 100% export oriented undertaking (in short 'EOU') who claimed partial exemption from duty in terms of Notification No. 8/97-C.E., dated 1-3-1997 in respect of goods sold in Domestic Tariff Area (in short 'DTA'), which stipulated 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fication No. 8/97 is available only if the products brought only from the raw materials produced or manufactured. The Board's Circular dated 5-5-1998 has clarified that 100% EOU is available for the benefit of the said Notification even if the imported consumables are used since the Notification does not bar the use of imported consumables. Reliance was placed in Ballarpur's case (supra) to conclude that the benefits of Notification were not available. It was also noted that in the case of Century Denim's EOU case (supra) the view taken was affirmed by this Court in Century Denim's case (supra). Accordingly, the appeals were dismissed. It is the assessee's stand in these appeals that the Tribunal had not correctly applied the decision in Ballarpur's case (supra) inasmuch as this Court clearly observed that the said decision was 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 appe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the appellant-Company to show cause why benefit of this Notification be not denied, as they are using 'Indigo pure' in the manufacture of Denim fabrics, which is an imported raw material and also for the recovery of Rs. 1,97,11,939/- being short duty paid on Denim fabric cleared in DTS Sales during the period 1-4-1997 to 30-1-1998 under Rule 9(2) of the Central Excise Rules, 1944 (in short the 'Rules') read with proviso to Section 11-A(1) of the Central Excise Act, 1944 (in short the 'Act') and also for imposing penalty under Section 11-AC of the Act and Rules 173Q and 209 of the Rules and also for recovery of interest on the duty short paid and with other directions about the confiscation of the land, building, plant and machinery, materials or any other things under Rule 173-Q(2) and Rule 209(2) of the Rules. 11. On 5-6-1998 the 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 absence 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 impossible. This quality should coalesce with the requirement that its utilization is in the manufacturing process as distinct from the manufacturing apparatus." 14. CEGAT had held in that case that the use of Indigo dye is a raw material in the manufacture of denim fibre. According to the High Court also 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd trade to identify and categorise raw material and consumables on such basis". 19. Since the reliance on dominant ingredient test in regard to cost variation has not been considered by CEGAT though the same has relevance, the matter is remitted to the CEGAT to consider those aspects. It shall also consider whether the items can be considered as "consumable" on the facts of the case. 20. Dealing with a case under a Sales Tax statutes, i.e. Andhra Pradesh General Sales Tax Act, 1957, this Court held that the word "consumable" takes colour from and must be read in the light of the words that are its neighbours "raw material", "component part", sub-assembly part" and "intermediate part". So read, it is clear that the word "consumables" therein refers only to material which is utilized as an input in the manufacturing process but is not identifiable in the final product by reason of the fact that it has got consumed therein. It is for this reason, a departure was made from the concept that "consumable" fall within the broader scope of the words "raw materials". Reference in this connection can be made to the view expressed in Deputy Commissioner of Sales Tax (Law), Board of Revenu ..... X X X X Extracts X X X X X X X X Extracts X X X X
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