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TMI Blog2005 (3) TMI 239X X X X Extracts X X X X X X X X Extracts X X X X ..... e condition that the goods are produced or manufactured wholly from the raw material produced or manufactured in India; that the Appellants imported various consumable items, namely lefasol, indigo powder, PVA, Discofix DBA, Ceraperm and resorcinol; that these items were mainly for sizing and for the purpose of dyeing yarn, fabrics or made-ups; that the Commissioner of Central Excise, under the impugned Order has confirmed demand of duty for the period 1997-1998 to November 2001 after issuing the show cause notice dated 26-3-2002 disallowing the benefit of Notification No. 8/97. Learned Advocate submitted that the Government, by its Circular No. 389/22/98-CX., dated 5-5-1998 has clarified that a 100% Export Oriented Undertaking is eligible for the benefit of Notification No. 8/97-C.E., even if imported consumables are used since the Notification does not debar the use of imported consumables provided other conditions of the Notification are satisfied; that thus the Appellants were under the bona fide belief that the imported items are consumables and are covered by the Government Circular; that the said Circular was withdrawn only by another Circular dated 31-1-2002, and therefore, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Central Excise Inspector and thereafter these were issued for production under the Supervision of the Department itself; that they had also claimed the benefit of Notification 8/97 in the Classification declaration filed by them with the Department; that moreover, the understanding of the Appellants of the Circular dated 5-5-98 was that they are eligible for the benefit of Notification even if imported consumables are used by them. He also mentioned that even Department was of view that all the items used by them are in the nature of consumables only; that this is evident from the letter dated 15-3-2002 of the Deputy Commissioner (Div) addressed to Deputy Commissioner (Prev); that in its report even the Range Superintendent has reported that all the items are consumables; that if the Departmental Officer themselves are of the view that these items are consumables, they can not be faulted for thinking and acting on the same lines. He relied upon the judgment in the case of Pushpam Pharmaceutical Company v. CCE, Bombay [1995 (78) E.L.T. 401 (S.C.)] wherein it has been held that the expression 'suppression of facts' has been used in company of such strong words as fraud, collusion or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the end-product; those which, as a result of interaction with other chemicals of ingredients, might themselves undergo chemical or qualitative changes and in such 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-product and those, as here, which might be burnt-up or consumed in the chemical reactions." Learned Senior Departmental Representative mentioned that the question before the Supreme Court was whether the ingredients of last mentioned clause qualifies themselves as and are eligible to be called "Raw Material" for the end-product; that the test laid down by the Supreme Court was that "the ingredients should be so essential for the chemical processes culminating in the emergence of desired end-product, that having regard to its importance and indispensability for the process, it could be said that its very consumption or burning-up is its quality and value as raw material"; that the Supreme Court further held that "in such a case the relevant test is not its presence in the end pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the manufacture of their products. The contention of the Appellants that these chemicals are consumables and not raw materials is not well-founded in view of the judgment of the Supreme Court in the case of CCE v. Ballarpur Industries Ltd. [1989 (43) E.L.T. 804 (S.C.)]. The Apex Court has considered therein as to whether the ingredients which might be burnt up or consumed in the chemical reactions qualify as and are eligible to be called "Raw-Materials" for the end-product. The Supreme Court has held that 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. Applying this test, the Supreme Court decided that Sodium Sulphate was used in the manufacture of paper as "Raw-Material". Similarly in the present matter the use of chemicals imported by the appellants was as raw materials as the finishing utility and value of the end product was dependent on the use of these chemicals. It is also worth mentioning that in Ballarpur's case, the Supreme Court observed that their observation in the case of Deputy Commissioner of Sales Tax v. Thomas Stephen Co. Ltd. - 1988 (34) E.L.T. 412 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cleared by the Appellants into Domestic Tariff Area. 6. The submissions made by the learned Advocate regarding non-invocability of the larger period of limitation are well founded. It is not disputed by Revenue that the Appellants were regularly filing 173B declaration claiming benefit of Notification No. 8/97. Further in view of the Board's Circular dated 5-5-1998, they were under the bona fide belief that the imported items were consumables and the benefit of Notification is available to them. It seems that the Department was also not clear about the correct interpretation of the words "raw materials" used in Notification No. 8/97. This is apparent from the correspondence exchanged between the Commissionerate and the C.B.E. C. The Board under Letter F. No. 314/12/2001-FTT, dated 3-9-2001 advised the Commissioner to take note of the judgment in Ballarapur Industries case. The finding of the Commissioner that the ingredient of Proviso to Section 11A of the Central Excise Act "is not what was in the notice of the Department but it is what was the suppression or wilful misstatement on the part of the assessee" is against the judgment of the Supreme Court in the case of Pushpam Ph ..... X X X X Extracts X X X X X X X X Extracts X X X X
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