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TMI Blog2001 (1) TMI 157X X X X Extracts X X X X X X X X Extracts X X X X ..... ry Denim and M/s. Maral Overseas Ltd. benefit of Notification No. 8/97, dated 1-3-1997. 2.Respondents in these cases are 100% EOU engaged in the manufacture of cotton fabrics. Century Denim manufacture cotton denim fabrics. Respondent in the other case, namely, Maral Overseas Ltd. are engaged in the manufacture of cotton yarn, cotton fabric and garments. These companies export substantial quantity of their goods to foreign countries. Main Raw material required for the manufacture of denim or yarn and fabric, as the case may be, is cotton entirely purchased locally. According to the manufacturers, the entire raw materials for the manufacture of the finished goods are procured from domestic market and not imported. Notification No. 8/97 pres ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the show cause notices. The said decision is under challenge. 4.In the case of Century Denim, the basic raw material for the production of finished goods is cotton. Cotton used in the manufacture of the finished goods is entirely produced within the country. For manufacture of denim fabrics, they use indigo pure, which is an imported material. According to the Revenue, this indigo pure, an imported material, is a dye used in the manufacture of finished product. Since this imported dye is used as a raw material, the finished product cannot claim the benefit of Notification No. 8/97. 5.M/s. Maral Overseas Ltd. manufacture their finished product, namely, cotton yarn, cotton fabric and garments. The main raw material for production of the fin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dia and allowed to be sold in India are exempted from so much of the duty of excise leviable under Section 3 of the Act as is in excess of an amount equal to the duty of excise leviable under that Section on like goods produced or manufactured in India. For this notification to come into play the finished products must be produced or manufactured by a hundred per cent export-oriented undertaking or a free trade zone wholly from the raw materials produced or manufactured in India. In other words, for getting the benefit of this notification, the finished products must be manufactured wholly from the raw materials produced or manufactured in India. So, the question to be asked is whether the respondents who are a hundred per cent export-orien ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tative changes and in such altered form find themselves in the end-product and (c) lastly, those which like catalytic agents, while influencing the chemical reactions, however, may themselves remain uninfluenced and unaltered and remain independent of and outside the end-product, like those which might be burnt up or consumed in the chemical reactions. All materials which fall into the above-mentioned categories were treated by their Lordships as raw materials. The relevant test has been stated by their Lordships as 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. Further, their Lordships stated : "The ingredient goes into the making of the end-product ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion that is to be asked is not what is the basic raw material from which the finished product is manufactured, but the question is what materials go into the manufacture of the finished product. If such a question is asked, namely, what materials have gone into the production of the finished product, answer will certainly be cotton fabric plus indigo pure. Indigo pure which has gone into the production of the finished product is thus the raw material. Same is the position in respect of lycra, buttons, etc. Those raw materials having been obtained by import takes the finished product outside the purview of Notification No. 8/97. 11.Learned Counsel then brought to our notice the C.B.E. & C. Circular No. 389/22/98-CX, dated 5-5-1998. That cir ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... materials. Since that finding of the Commissioner is reversed, as stated hereinabove, issues regarding limitation and the actual quantum of duty payable by the manufacturers will have to be examined by the Commissioner. 13.So, for the purpose of deciding those issues, the matter is remitted back to the Commissioner. 14.Orders passed by the Commissioner, which are impugned in these appeals, are set aside and the matter is remitted back to the Commissioner for decision as to whether the Department was justified in invoking the extended period of limitation under proviso to Section 11A(1) of the Act and also the actual quantum of duty payable by the manufacturers. Since the issue is a long pending one, Commissioner will decide the above iss ..... X X X X Extracts X X X X X X X X Extracts X X X X
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