1986 (6) TMI 200 - AT - Central Excise

Summary

Issues:
- Eligibility for exemption under Notification No. 201/79 for various chemicals used in the manufacture of aluminum.
- Consideration of chemicals as raw materials or component parts.
- Interpretation of the term "raw materials" under the notification.
- Recovery and recycling of chemicals in the manufacturing process.
- Applicability of time limits for duty demand.
- Comparison with previous Tribunal orders.
- Specific functions of chemicals in the manufacturing process.

Detailed Analysis:

The case involves the eligibility for exemption under Notification No. 201/79 for chemicals used in aluminum manufacturing. The chemicals in question include Cryolite, Calcium Fluoride, Aluminium Fluoride, Boric Acid, "Degasser," and "Coverall." The Assistant Collector denied exemption, while the Collector (Appeals) granted it, leading to the Collector appealing against the decision.

The main issue revolves around whether these chemicals can be classified as raw materials under the notification. The Department argued that since the chemicals do not become part of the finished aluminum product, they do not qualify as raw materials. However, the Respondent contended that these chemicals are essential for the extraction of aluminum, citing industry standards and publications supporting their stance.

The recovery and recycling of chemicals during the manufacturing process were also discussed. While a part of Cryolite is lost during the process, the rest is recovered and reused. The Tribunal emphasized that the exemption applies only to the quantity of chemicals actually used up during manufacturing, with any remaining quantity being subject to duty.

Regarding the time limits for duty demand, the Department cited a previous Tribunal order, but the Respondent argued that the show cause notice issued cited Section 11A, making the time limit applicable to the case.

The Tribunal compared the present case with previous orders regarding the interpretation of raw materials. It highlighted the relevance of these orders, emphasizing that the chemicals used in the process of separating aluminum from alumina qualify as raw materials under the notification.

In conclusion, the Tribunal upheld the Collector (Appeals)' decision, stating that the chemicals used in the manufacturing process are indeed raw materials eligible for exemption. However, it clarified that duty would apply to any unused quantities of ingots as per the notification's provisions.