Pollution-control input used in manufacturing process qualifies for exemption benefit under Notification No. 67/95.

Caustic soda consumed within the factory to treat unreacted sulphur dioxide was held to qualify as use in or in relation to manufacture because it was necessary to comply with pollution-control directions and to lawfully produce the final goods. On that basis, the exemption under Notification No. 67/95 could not be denied. The ruling treats inputs used for mandatory environmental compliance, where directly connected with the manufacturing process, as eligible for the exemption benefit.

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Issues: Whether caustic soda used within the factory for treatment of unreacted sulphur dioxide was eligible for benefit under Notification No. 67/95.

Analysis: The use of caustic soda was found to be necessary for compliance with the directions of the pollution control authorities and for the lawful manufacture of the final goods. Since the input was used in or in relation to manufacture, the condition for the exemption benefit was satisfied.

Conclusion: The benefit of Notification No. 67/95 could not be denied, and the assessee succeeded.

Ratio Decidendi: An input consumed within the factory to meet mandatory pollution-control requirements and directly connected with manufacture qualifies as use in or in relation to manufacture for the purpose of exemption.

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