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2016 (9) TMI 780 - CESTAT HYDERABAD

2016 (9) TMI 780 - CESTAT HYDERABAD - TMI - 100% EOU - the goods should have produced or manufactured in 100% EOU wholly form the raw materials produced or manufactured in India - Classification - whether epoxy resin should be treated as consumables as per appellant or as a raw material as per Department which forms part of the final product - Held that:- the imported Epoxy resin only adds gloss and smoothness and fills up on the surface orifices. It is not disputed that the granite slabs is com .....

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hri G. Prahlad for the Respondent ORDER Brief facts of the case are that the assessee M/s. Alliance Minerals Pvt. Ltd, Tada, Nellore District are 100% EOU, and are engaged in the manufacture of Polished Granite Slabs falling under Chapter Sub Heading No.68022390 of Central Excise Tariff Act, 1985. The assessee obtained Customs Private Bonded Warehouse License and commenced production from February 2008. The Assessee are cleaning their goods in DTA as permitted by the Development Commissioner and .....

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ture of polished granite slabs; that he resin has double effect of assuring the strength of the slabs and providing a clean feeling of touch; that during the period (i) from July, 2010 to December,2010, the assessee imported 4110 Kgs of Epoxy Resin valued at ₹ 22,73,070/- and cleared a quantity 12,18,623 Sq. Meters of polished granite slabs valued at ₹ 73,90,191/- as DTA sales, on which the assessee are liable to pay differential duties of ₹ 12,22,574/- and (ii) from January, 2 .....

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due adjudication process, the two cases were disposed of by the Adjudicating Authority vide Orders-In-Original both dated 21.05.2012. Aggrieved by the confirmation of demands and imposition of penalties, the assessee filed appeals against both the orders. The appellate authority vide order-In-appeal No.10 & 11/13(G)CE, dt.14.03.13 set aside the orders of lower authority. Hence these two appeals by the Department. 2. On behalf of the Department, learned AR Shri Arun Kumar submitted that the .....

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orted along with the capital goods, However, in the instant case, epoxy resin and ager were not imported along with capital goods. 3. On behalf of the assessee learned advocate Shri G. Prahlad submitted that the impugned orders of commissioner(Appeals) were just and fair and the matter stands settle by a number of judgments. 4. Heard both the sides and have also gone through the records and facts. 5. The main thrust of the appeal preferred by the Department is that epoxy resin should not be trea .....

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;The question, in the ultimate analysis, the whether in input of Sodium Sulphate in the manufacture of paper would cease to be a Raw-Material by reason alone of the fact that in the course of the chemical reactions this ingredient is consumed and burnt-up. The expression Raw-Material is not a defined term. The meaning to be given to it is the ordinary and well-accepted connotation in the common parlance of those who deal with the matter. The ingredients used in the chemical technology of manufac .....

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ain uninfluenced and unaltered and remain independent of and outside the end-products and those, as here, which might be burnt-up or consumed in the chemical reactions. The question in the present case is whether the ingredients of the last mentioned class qualify themselves as and are eligible to be called Raw-Material for the end-product. One of the valid tests, in our opinion, could be that the ingredient should be so essential for the chemical processes cluminating in the emergence of the de .....

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such, is rendered impossible. This quality should coalesce with the requirement that its utilisation is in the manufacturing process as distinct from the manufacturing apparatus. This elucidation of raw material in the Ballarpur industries Ltd. case has been relied upon and referred to, in a number of subsequent judgments of the Supreme Court. From the ratio of the Ballarpur case, it is thus evident that to be considered as a raw material the ingredient should be so essential for the chemical pr .....

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only facilitates better visual appearance. It the circumstances, I am of the considered opinion that the said Epoxy resin cannot be considered as raw material in the facts of the instant case. 8. In arriving at this conclusion, I also find sustenance from the ratio of the following case laws:- a. Gem Granites Vs. CC. Seaport(Import), Chennai [2007 (216)ELT 153 (Tri. Chennai)] Relevant portion is reproduced below:- 2. The appellants are a 100% Export Oriented Unit engaged in the manufacture .....

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roduct was manufactured out of indigenously procured granite blocks. However, in the process of cutting and polishing of the said raw material, the appellants had used certain imported epoxy resins. These resins filled any hairline cracks, fissures or holes which might arise on the surface of the slabs on cutting and polishing. The department took the view that an imported raw material had been used in the manufacture of the granite slabs and, therefore, the benefit of the Notification would not .....

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on a similar set of facts, the Tribunal s co-ordinate Bench at Bangalore held, in the case of certain other EOUs, that the epoxy resins used by the EOUs in the manufacture of granite slabs out of indigenously procured granite blocks were not to be considered as raw material but only as consumables and, accordingly, the Bench allowed the benefit of Notification No. 8/97-C.E. dated 1-3-97 (predecessor to Notification No. 23/03-C.E.) to the EOUs vide Final Order Nos. 404-407/2007, dated 27-3-2007 i .....

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slabs during the material period and hence were eligible for the benefit of concessional rate of duty under Notification No. 23/03-C.E. ibid. The demand of duty is not sustainable. The impugned order is set aside and the appeal is allowed. b. Imperial Granites Ltd. vs. CC&CE, Tirupathi [2007(218) ELT 618 (Tri.Bang.)] Relevant portion is reproduced:- 3. It is alleged that the appellants have used epoxy resin and agar which are raw materials and not consumables as per Foreign Trade Policy .....

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hed granites are removed even without use of these two materials in large number of cases. This is used only when there are certain cracks in the granites and they are removed after its use. It does not remain along with the final product. They drew strength from the Apex Court judgment rendered in the case of CCE v. Ballarpur Industries Ltd. - 1989 (43) E.L.T. 804 (S.C.) which analyzed the definition of raw materials in Para 5 of this judgment. The judgment concludes The ingredients goes into t .....

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h, the issue is covered by the judgment of this bench rendered in the case of Forbes Gokak Ltd. v. CCE - 2005 (192) E.L.T. 1000 wherein imported wax used for grazing cotton yarn was held to be consumable. It was submitted that this ratio would apply to the present case, as the judgment refers to the Apex Court judgment rendered in the case of CCE v. Ballarpur (supra). Further reference is made to the judgment of this bench which has follows the Forbes Gokak Ltd. v. CCE rendered in the case of Ma .....

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levant test laid down by the Apex Court is that the raw materials are 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 quantity should coalesce with the requirement that its utilization is in the manufacturing processes as distinct from the manufacturing apparatus . This test was applied by this Bench in the case of Forbes Gokak Ltd. v. CCE (supra) wherein imported wax was used for .....

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ch is washed off before yarn is used for weaving. 12.1 In the case of CCE v. Ravileela Granites, the Commissioner (A) has analysed in great detail as to what is a raw material in the light of the Apex Court judgment rendered in the case of CCE v. Ballarpur Industries Ltd. (supra). He has referred to the Board s Clarificatory circulars as well as to the letters issued by the Development Commissioners clarifying that both these items are consumables. He has clearly noted after stating the man .....

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the finding rendered by the Tribunal in the case of Forbes Gokak Ltd. (supra) and Maruti Cottex Ltd. (supra) in the light of the Apex Court judgment in the case of CCE v. Ballarpur Inds. Ltd. (supra) would clearly apply to the facts of these cases. The clarificatory Board Circular and letters issued by the Development Commissioners clarifying the item to be consumables cannot be discounted and they are required to be taken into consideration. 12.2 To sum up : There is no merit in the Commis .....

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elevant portion is reproduced below:- 4. I have carefully considered the case records and the submissions made by both sides. I find that the Tribunal had decided the dispute in favour of the assessees in the Gem Granites case (supra) and the Imperial Granites (P) Ltd. (supra) in cases of similar facts while interpreting the scope of Notification No. 8/97-C.E., predecessor to Notification No. 23/03-C.E. In the instant case, the appellants had manufactured and cleared granite slabs and had u .....

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chemical processes culminating in the emergence of the desired end product, that having regard to its importance in and indispensability to the process, it could be said that its very consumption or burning up is its quality and value as raw material and in such a case, a relevant test is not the presence of the ingredient of the end product, but the dependence of the end product for its essential presence at the delivery end of the process . As per this observation, materials which are essentia .....

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