ORDER
D.C. Mandal, Member (T)
1. The question to be decided in this case is whether the appellants were entitled to Proforma Credit under Notification No. 201/79-C.E., dated 4.6.1979, as amended by Notification No. 105/82-C.E., dated 28.2.1982, in respect of the duty paid on sodium Sulphate, Alumina Ferric, Rosin, Pulverised Guar Gum, Sodium Hexa Meta Phosphate, Formaldehyde and Glyoxal 40% used in the manufacture of paper and paper board. The Superintendent of Central Excise, Range II, Jamuna Nagar denied the benefit of above notification w.e.f. 9.11.1982 on the plea that the abovementioned items were not raw materials and were burnt and not retained in the paper. A show cause notice was issued on 18.1.1983 for recovery of duty equivalent to Proforma Credit availed on the above items for the period from 28.2.1982 To31.10.1982 on the same grounds. The Assistant Collector of Central Excise, Ambala, vide his Order-in-Original No. 53-SE/86, dated 27.6.1986, held that the aforesaid inputs were essential raw materials for the manufacture of paper and paper board and were entitled for the benefit of Notification No. 201/79-C.E., as amended by Notification No. 105/82-C.E. Accordingly, he vacated the show cause notice dated 18.1.1983 and allowed the Proforma Credit. The Collector of Central Excise, New Delhi reviewed the order of the Assistant Collector Under Section 35-E of the Central Excises and Salt Act, 1944 and passed an order for filing an application to the Collector of Central Excise (Appeals), New Delhi Under Section 35-E(4) of the Act ibid. On an application filed by the Department Under the aforesaid Section, the Collector of Central Excise (Appeals), vide the impugned order, set aside the Order-in-Original of the Assistant Collector and remanded the matter to the Assistant Collector of Central Excise for re after taking into consideration all the facts and circumstances and after giving fresh and reasonable opportunity to the appellants. The appellants have challenged the .order of Collector (Appeals) in the present appeal before us.
2. We have heared Shri Sreedharan, Advocate for the appellants and Shri Durghayya, DR for the respondent. The learned advocate for the appellants has stated that the period of this case is from 28.2.1982 to 31.10.1982. The Notification No. 201/79-C.E., dated 4.6.1979, as amended by Notification No. 105/82-C.E., dated 28.2.1982 is, therefore, applicable to the case of the appellants. He has argued that the appellant’s case is squarely covered by the decision of this Tribunal in the case of Seshasayee Paper and Boards Ltd. v. Collector of Central Excise, reported in 1985 (22) E.L.T. 163 (Tribunal). He has stated that the aforesaid case related to period after amendment of Notification No. 201/79-C.E. by Notification No. 105/82-C.E., dated 28.2.1982. In that case Alum, Sodium Sulphate Lye, Sodium Sulphate, Daicol (Guar Gum) and Gluo solid lime were used in the manufacture of paper and paper board. The Tribunal held that the “raw materials”, referred to in the amended notification, need not necessarily find place in the final product and that the chemicals are to be treated as “raw materials” if those are essential for the process of manufacture. Since in that case the aforesaid inputs were essentially required for the manufacture of paper and paper board, the Tribunal allowed the benefit of Notification No. 201/79-C.E., as amended by Notification No. 105/82-C.E. The learned advoacate has also relied on the Tribunal’s decision reported in 1988 (11) ETR 519 in the case of Sirsilk Limited, Sirpur-Kaghaznagar (A.P.) v. Collector of Central Excise, Hyderabad (decided on 29.1.1988). That case also related to the period after 28.2.1982 and the amended notification was involved. In the said case, in continuous process of manufacture of Acetate Yarn/Staple Fibre/Tow, the appellants therein had put in Acetal Dehyde and Acetic Acid falling under Tariff Item 68 as starting raw materials. However, in the continuous process of manufacture, these two raw materials or inputs were converted into certain other finished products, one of which was Cellulose Acetate falling under Tariff Item 15-A(1). Cellulose Acetate was the penultimate final product in the continuous process of manufacture prior to the stage of Acetate Yarn/Staple Fibre/Tow. The Tribunal held that there was nothing in the notification to hold that the inputs falling under Tariff Item 68 should form an integral part of the finished products. There was also no materials before the Tribunal to show that the Cellulose Acetate which arose as an intermediate product was cleared as such from the appellants’ factory. In the circumstances, the Tribunal could not subscribe to the view that the appellants therein did not use acetal dehyde and acetic acid falling under Tariff Item 68 in the manufacture of Acetate Yarn/Staple Fibre/Tow. In that case the Tribunal held that the benefit of Notification No. 201/79-C.E., dated 4.6.1979 as amended should be extended to the Acetate Yarn/Staple Fibre/Tow for the manufacture of which the appellants therein used acetal dehyde and acetic acid falling under Tariff Item 68 as starting raw materials, irrespective of the fact that the continuous process of manufacture some other intermediate products arose which were not cleared as such from the factory, but were converted into the final finished product. Shri Sreedharan also relied on this Tribunal’s decision in the case of Collector of Central Excise, Indore v. Gwalior Rayon Silk Mfg. (Wvg.) Co. Ltd., reported in 1988 (35) E.L.T. 227 (Tribunal). In the said case, Titanium Substrate Insoluble Anodes, falling under Tariff Item 68, utilised as Electrodes and forming part of Electrolytic Cells were used in the manufacture of Caustic Soda falling under Tariff Item 14-B. In paragraph 4 of the order, the Tribunal observed that the Hon’ble Supreme Court and the Tribunal in its various decisions had interpreted the words “used in the manufacture of in a wider sense to mean such of the goods as are used in relation to the manufacture of the end products specified in the Notification. In view of the nature of the goods and their nexus with the production process, the Tribunal in that case held that the benefit of Notification No. 201/79-C.E., dated 3.6.1979 was available.
3. Arguing for the respondent-Collector, Shri Durghayya has relied on this Tribunal’s decision, reported in 1987 (31) E.L.T. 218 (Cegat), in the case of Collector of Central Excise, Chandigarh andAnr.s. Kashmir Vanaspati and Anr.. The said case related to post-amendment period. In the said case, Nickel catalyst was used in the manufacture of vegetable product as a cleaning agent. The Tribunal considered the meaning of “raw materials” and “component part” as given in the Law Lexican by Shri T.P. Mukherjee, 1982 (Volume 2) and (Volume 1) respectively and held that the catalyst could not be considered as raw material and hence not entitled to the benefit of concession under Notification No. 201/79-C.E. Shri Durghayya has relied on another decision of this Tribunal, reported in 1988 (35) E.L.T. 479 (CEGAT) in the case of Amrit Vanaspati Company v. Collector of Central Excise, Meerut in which it followed the earlier decision reported in (supra) and allowed the benefit of the aforesaid Notification No. 201/79-C.E. as amended by Notification No. 105/82-C.E., in respect of nickel catalyst, activated carbon and phosphoric acid. Shri Durghayya has cited the decision of the Supreme Cour, reported in JT 1988 (1) S.C. 631, in the case of Deputy Commissioner of Sales Tax (Law), Board of Revenue (Taxes), Emakulam v.Mls. Thomas Stephen & Co. Ltd., Quilon. In the said case, the assessee used cashew shells, lime shells, etc. as fuel in the kiln to manufacture ceramic tiles. While examining the applicability of Section 5-A of the Kerala General Sales Tax Act, 1963, the Hon’ble Supreme Court held that the cashew shells had been used as fuel in the kiln and not as raw material in the manufacture of goods. Consumption must be in the manufacture as raw material or of other components which go into the making of the end product to come within the mischief of that section. Since cashew shells did not tend to the making of the end product, but was used for ancillary purposes like fuel in the process of the manufacture, the same did not fall within Section 5-A(1)(a) of the Act ibid.
4. We have considered the records of the case and the arguments of both sides. The substantive portion of the Notification No. 201/79-C.E., dated 4.6.1979 is reproduced below :-
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This notification was amended by Notification No. 105/82-C.E., dated 28.2.1982. The amended version of the notification is as follows:
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5. The items in dispute and their f uctions in the manufacture of paper or paper board have been discussed by the Assistant Collector of Central Excise, Ambala in the order-in-original, an extract of the relevant portion whereof is given below :-
(i) SODIUM SULPHATE:
This is reduced in the chemical recovery cycle of Sodium Sulphide which form essential constituent of Sulphate cooking liquor used in the digestion operation.
(ii) ALUMINA FERRIC:
Alum functions as a precipitent, retention aid and a critical part of sizing agent itself.
(iii) ROSIN:
It alongwith alum ferric forms a sizing which is the process of imparting resistence to the penetration of liquids to paper and paper board,
(iv) GUAR GUM:
It is an effective additive for inhibiting flocculation. This is used to improve sheet formation and improve strength properties.
(v) SODIUM HEXAMETA PHOSPHATE:
It is used as a dispersing agent in the coating formation.
(vi) FORMALDEHYDE:
It is used in coating formation as a preservative.
(vii) GLYOXAL 40%:
It is used to impart wet strength properties to coated papers, essential for better off set printing results."
6. In support his argument that the benefit of Notification is not admissible in the present case the learned DR has relied on this Tribunal’s decision reported in (supra). In paragraph 16 of the said decision the Tribunal has quoted the meaning of the word “raw materials” contained in the Law Lexicon by Shri T.P. Mukherjee, 1982 (Volume 2). It is stated therein that raw materials as used in the defuncdon of manufacture denote merely materials from which a final product is made. From the functions of the disputed items as stated in paragaraph 5 above, we observe that each of the items has got a definite function, essential in the manufacture of paper or paper board. They get consumed in the process of manufacture of the finished product, paper or paper board. The Superintendent of Central Excise has observed that the inputs were burnt. We are of the view that these are raw materials for the purpose of the Notification No. 201/79-C.E. as amended. The two decisions of the Tribunal relied on by the learned DR relate to Nickel Catalyst which is used as cleaning agent in the manufacture – of vegetable product. After emergence of vegetable product the catalyst is not present in the final product. Catalyst remains as is it and it can be reused. In the circumstances, the Tribunal considered that the catalyst was not raw material. The facts in those two cases are, therefore, distinguishable from the facts of the present case. The facts of the case decided by the Supreme Court (supra) are also clearly distinguishable from the present case inasmuch as the cashew shells were used as fuel in that case and not as a raw material in the manufacture of finished goods. The Supreme Court judgment relied on by the learned DR is not, therefore, applicable to the present case.
7. In paragraph 4 & 5 of the decision, reported in 1985 (22) E.L.T. 163 (Tribunal) -Seshasayee Paper andBoards Ltd. v. Collector of Central Excise, the Tribunal has observed as follows :-
“4. In order dated 31.3.1984 in appeal No. ED(MAS) 368/83 in the case of Sandur Manganese and Iron Ores Ltd. Yeswantnagarv. Collector of ‘Central Excise, Bangalore, this Bench has already held that 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. Adopting this general approach, we find that alum which is added to pulp stock as distinct from what is used for treatment of Cauveri water, sodium sulphide lye, Sodium Sulphate, Daicol (Guar 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 process of manufacture. The plea of the SDR that Sodium Sulphate which is added in the recovery plant should not be granted the concession, is resisted by the representative of the appellants with the explanation that addition of Sodium Sulphate at the recovery stage of closed circuit is a measure of convenience, the black liquid which contains organic carbonaceous matter and during burning sodium sulphate gets reduced to Sodium Sulphide and with the addition of lime, Sodium Hydroxide is produced. This along with Sodium Sulphate is taken to the digester where, as observed earlier Sodium Sulphide is formed and assists in the process of digestioin. We do not think that the stage at which Sodium Sulphate is added should make any difference to its being treated as raw material when we note that the addition at the recovery stage is a matter of convenience and not one for the purpose of recovery of Sodium Hydroxide.
5. In the result, we order that the items referred to in para 3 supra, viz. Alum (in part), Sodium Sulphide Lye, Sodium Sulphate, Daicol (Guar Gums) and Fluo solid lime, be allowed the benefit of Notification No. 201/79, as amended by Notification No. 105/82 and allow the appeal.”
We agree with the above observation that 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 technical literature. In Seshasayee’s case, Sodium sulphide lye, Sodium sulphate, Daicol (Guar gum) and Fluo solid lime used in the manufacture of paper or paper board were considered as raw materials as they served distinct and definite purpose in the normal and recognised process of manufacture of paper or paper board and were essential in the process of manufacture. The facts are similar in the present case. In the present case all the 7 inputs are essentially required for the manufacture of paper or paper board. We, therefore, hold that the benefit of Notification No. 201/79-C.E. as amended by Notification No. 105/82-C.E. is admissible in respect of the same. In the circumstances, we set aside the order of the Collector (Appeals) and allow the appeal filed by the assessee.