Effluent-treatment inputs qualify as inputs used in relation to manufacture, extending exemption for soda ash solution under Notification No. 217/86.

Soda ash solution used in effluent treatment was treated as an input used in relation to manufacture, because effluent treatment was considered an essential and integral part of the production process. On that basis, the exemption principle under Notification No. 217/86 was extended to materials deployed in pollution-control and effluent-treatment plants connected with manufacture, and the denial of exemption was set aside.

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Issues: Whether soda ash solution used in effluent treatment was eligible for exemption under Notification No. 217/86.

Analysis: The exclusion of the first issue concerning excisability left only the exemption question for decision. The applicable principle was that treatment of effluents is an essential and integral part of the manufacturing process, and materials used in such treatment are regarded as used in relation to manufacture. The reasoning adopted the Supreme Court's approach that an exemption notification covering inputs used in or in relation to manufacture extends to items deployed in pollution-control and effluent-treatment plants connected with the production process.

Conclusion: Soda ash solution used for effluent treatment was held eligible for exemption under Notification No. 217/86, and the denial of exemption was set aside.

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