TMI Blog2007 (7) TMI 79X X X X Extracts X X X X X X X X Extracts X X X X ..... ssed over an imported wax disc fitted on the cone winder (Auto Coner) at a speed of 1200 to 1500 meters per minute when the wax gets coated on the yarn. The yarn surface is smoothened and wax coating imparts lubrication to the yarn. The wax coating on the yarn is necessary for knitting of the yarn into hosiery. The coating disappears in the further processes the knitted fabric is subjected to. Therefore, at the time of clearance of the yarn from the factory the wax forms part of the yam. These facts are not in dispute. 2. The Commissioner had accepted the argument of the assessee that wax was a consumable. As per the relevant Exim policy provisions, consumables are materials that get used up in the process of manufacture. In the instant case wax does not get used up in the manufacture of yarn but remains part of the yarn. Part of the impugned clearances had been manufactured with imported cotton. The Commissioner had accepted the plea of the assessee that cotton that had suffered duty on import was at par with indigenous cotton and cotton yarn manufactured using such cotton was eligible for the benefit of Notification No. 8/97. This was not in accordance with the terms of the N ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mal Textile Industries v. CCE, Jaipur, Final Order Nos. 21-22/2003, dated 15-1-2003 [2004 (164) E.L.T. 468 (Tri.)]. The decision of the Tribunal in the case of Century Denim (supra) against the assessee had been affirmed by the Hon'ble Supreme Court. In Vimal Textile Industries (supra), the Tribunal had denied the benefit of Notification No. 8/97 as the appellants had used imported raw materials in the process of manufacture of the goods cleared in DTA. Accordingly, the Tribunal, in the Ginny International Limited (supra) case, had upheld the demand confirmed by the Commissioner (Appeals). 4. The learned Sr. Counsel appearing for the assessee submitted that an exemption notification should not be interpreted in such a way as to frustrate the legislative intent behind it. On a strict interpretation of the notification, once the subject was found to fall in the exception to be eligible for the exemption, the notification should be construed liberally to allow it full play. He cited the case law Union of India v. Wood Papers Limited [1990 (47) E.L.T. 500 (S.C.)] laying down the said ratio in support. He also cited the following observations contained in the judgment o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 02 clarifying that consumables are not raw materials and its use will not disentitle the benefit of the Notification in question, the appellant's prayer for setting aside the impugned order is required to be upheld." The learned Sr. Counsel also stated that the Tribunal, in Nahar Spinning Mills v. CCE [149 E.L.T. 498 (Tri.-Del.)] had decided that the wax used in the cone winding machine was a consumable. 6. We have carefully considered the case records and the rival submissions. The Notification No. 8/97-C.E. exempts the finished products, rejects and waste or scrap specified in the Schedule to the Central Excise Tariff Act, 1985 and produced or manufactured, in a hundred per cent export oriented undertaking or a free trade zone wholly from the raw materials produced or manufactured in India from so much of the duty of excise leviable thereon under Section 3 of the Central Excise Act, 1944 (1 of 1944), as is in excess of-an amount equal to the aggregate of the duties of excise leviable under the said Section 3 of the Central Excise Act or under any other law for the time being in force on like goods, produced or manufactured in India other than in a hundred percent export o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ured by the appellants, a EOU for the same Notification No. 8/97. The appellants had used imported dye as a raw material in the manufacture of Denim fabrics. Relying on the ratio of the Apex Court's judgment in Ballarpur Industries Ltd. (supra), the High Court decided that the finished product could not be treated as produced or manufactured wholly from cotton. The High Court upheld the order of the Tribunal in the case which had denied the appellants the benefit of Notification 8/97 in respect of such Denim fabric manufactured using also imported dye. The same view was taken by the Tribunal in the case of Century Denim (EOU) (supra) upheld by the Apex Court. 7. We find that the term "consumables" is defined in para 3.13 of the Exim Policy 1997-2002 as under "Consumables" means any item, which participates in or is required for a manufacturing process, but does not form a part of the end-product. Items, which are substantially or totally consumed during a manufacturing process, will be deemed to be consumables." The Circular No. 614/5/2002-CX, dated 31-1-2002 of the CBEC had clarified that use of imported consumables will not be a bar to an EOU enjoying ex emption under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of the yam when it is taken for weaving after clearance. The Madhya Pradesh High Court had disallowed the benefit of the subject notification to goods manufactured using imported material. The Tribunal in the Century Denim case (supra) had also decided that if imported materials are used in the manufacture of finished goods, the same were not eligible for the benefit of the Notification. In Forbes Gokak Ltd. (supra) the Tribunal followed a different definition of the raw material rendered by a Textile Technology Expert and took a contrary view of the scope of Notification No. 8/97. The case dealing with use of epoxy resin in the finishing of granite slabs is different from the subject case in that epoxy resin was removed in polishing before clearance of the finished product, granite slabs. 11. In Nahar Spinning Mills (supra), in the context of examining admissibility of imported wax discs to capital goods credit, the Tribunal decided that synthetic wax rolls were a consumable and could not be considered as a component or spares of the autoconer machine. It was only a raw material which directly went into making of the final product and hence not eligible for capital goo ..... X X X X Extracts X X X X X X X X Extracts X X X X
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