TMI Blog1989 (9) TMI 99X X X X Extracts X X X X X X X X Extracts X X X X ..... espondent was entitled to certain pro forma credits of the duty paid on "sodium sulphate" used in the manufacture of paper and paperboards in which the respondent is engaged. The short point for consideration in this appeal is whether the respondent-manufacturer, the Ballarpur Industries Ltd., was entitled to the benefit of Central Government's Notification No. 105/82-CE, dated February 28, 1982, a question which, in turn, depends on whether sodium sulphate could be said to have been used as "raw-material", in the manufacture of "paper" and "paperboard". In the proceedings before the authorities, the dispute initially concerned six other inputs. But the controversy before us was limited, as it should rightly be, only to sodium sulphate inasmuch as even in the appeal before the Collector (Appeals), the Department's grievance, apparently, was confined to the pro forma credits of duty earlier paid on sodium sulphate [See Column 6 of the Assistant Collector's Memorandum Appeal dated July 15, 1987, before the Collector (Appeals)]. The respondent is a manufacturer of paper and paperboards in the processes relating to which "sodium sulphate" is used "in the chemical recovery cycle of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cation. The show cause notice dated January 18, 1983, was, accordingly, set aside. But, the Collector of Central Excise (Appeals) set aside the order of the Assistant Collector and remitted the matter to the Assistant Collector for readjudication. The respondent-manufacturer challenged this order before the Tribunal. The Tribunal upheld the contention of the respondent-manufacturer, set aside the order of the Collector (Appeals) and restored the order of the Assistant Collector. The Tribunal adopted the reasoning in its earlier decision in Seshasayee Paper and Boards Ltd. v. Collector of Central Excise [1985] 22 ELT 163 in which the Tribunal had held : "... the term 'raw material' has to be interpreted in the circumstances of each case in the absence of any acceptable or useful definition of the term either in the dictionary or in the technical literature . . ." "... sodium sulphide lye, sodium sulphate, Daicol (gaur gums) and fluo solid lime used for the bleaching of pulp should be considered as raw materials in the manufacture of paper ; they serve a distinct and definitive purpose in the normal and recognised process of manufacture of paper and are essential for the proces ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ess of manufacture of paper itself ; and, secondly, that sodium sulphate did not go directly into and find a place in the finished product and did not, therefore, qualify for being "raw material" in the manufacture of paper. Learned counsel said that no satisfactory answer to the question raised in the appeal could be afforded unless a clear line of demarcation between the material merely used in the manufacture of paper on the one hand and material used as "raw material" on the other is drawn. Sri Ganguly sought to substantiate this distinction in the present case with reference to certain observations of this court in Deputy CST v. Thomas Stephen and Co. Ltd. [1988] 69 STC 320 (SC). One of the questions there was whether cashew shells used in the kiln by the dealer who was manufacturer of tiles, terracotta ware and ceramic items were exigible to purchase tax under section 5A(1)(a) of the Kerala General Sales Tax Act, 1963, on the ground that the dealer had "consumed such goods in the manufacture of other goods . . ." The Tribunal had held that cashew shells had been used only as fuel in the kiln for the manufacture of tiles and that, therefore, the condition of section 5A(1)(a) o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... "The sulphate (kraft) pulping process, now the most common pulping process for both wood and non-wood fibrous raw materials, requires the purchase of saltcake (sodium sulphate) and limestone (calcium carbonate). Depending on the efficiency of the recovery system, about 40 to 80 kilogrammes of saltcake and 25 kilogrammes of limestone are needed per ton of pulp. These chemicals are converted in the chemical recovery and causticizing systems to give sodium hydroxide and sodium sulphide, which are the active chemicals in the pulping liquor." [p. 275] Sri Sorabjee submitted that the Tribunal had consistently taken this view in several cases and that the Department not having carried those matters up in appeal must be held to have accepted the correctness of that view. As instances in point, learned counsel referred to two decisions, Collector of Central Excise v. Ballarpur Industries Ltd. [1983] ELT 1263 and Collector of Central Excise v. Titaghur Paper Mills [1985] 21 ELT 901. Adverting to the appellant's contention that the use of sodium sulphate was at a stage of preparation of the pulp which is a stage anterior to the actual manufacture of paper, Sri Sorabjee submitted that, ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the manufacturing process as distinct from the manufacturing apparatus. The decision of this court in Deputy CST v. Thomas Stephen and Co. Ltd [1988] 69 STC 320 (SC), relied upon by Sri Ganguly, does not really advance the appellant's case. The observations therein to the effect that "consumption must be in the manufacture of raw material or of other components which go into the making of end-product" were made to emphasise the distinction between the "fuel" used for the kiln to impart the heat-treatment to ceramics and what actually went into the manufacture of such ceramics. The observations, correctly apprehended, do not lend themselves to the understanding that, for something to qualify itself as "raw material", it must necessarily and in all cases go into, and be found, in the end-product. We also find no substance in the contention of Sri Ganguly that the process in which sodium sulphate was used, was anterior to and at one stage removed from the actual manufacture of paper, Sri Sorabjee's answer to this contention is, in our view, appropriate. That apart, the following observations in Collector of Central Excise v. Eastend Paper Industries Ltd. [1990] 186 ITR 105 (SC ..... X X X X Extracts X X X X X X X X Extracts X X X X
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