Set-off for inputs used in manufacture extends to process materials that do not become part of the finished product.

Where a notification grants set-off for duty-paid goods "used in the manufacture" of excisable goods, eligibility does not depend on the inputs becoming part of the finished product. The distinction from wording such as "manufactured from" is material, because the broader expression covers catalysts, solvents, and other process materials used in manufacture even if they do not form a constituent component. On that construction, duty-paid Item 68 goods remained eligible for set-off, the rejection of the claim was unsustainable, and the appeal succeeded.

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Issues: Whether duty-paid goods used in the manufacture of excisable goods qualify for set-off under Notification No. 178/77-C.E. dated 18-6-1977 even if they do not form a component part of the finished product.

Analysis: The notification employed the expression "used in the manufacture" and not "manufactured from". The distinction is material: the latter may suggest that the inputs must become part of the finished product, whereas the former does not impose such a requirement. On that construction, duty-paid goods falling under Item 68, if used in the manufacture of a finished product, remain eligible for set-off notwithstanding that they are only catalysts, solvents, or other process materials and do not become component parts of the finished goods.

Conclusion: The set-off claim was admissible and the rejection of the claim was unsustainable.

Final Conclusion: The appeal succeeded and the impugned order was set aside.

Ratio Decidendi: Where a notification grants relief for goods "used in the manufacture" of excisable goods, eligibility does not depend on the inputs becoming a constituent component of the finished product.

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