1983 (5) TMI 243 - AT - Central Excise

Tribunal: Sodium Sulphate Qualifies as Essential Input for Paper Manufacturing

The Tribunal held that Notification 201/79 exempts all excisable goods in which goods under Item 68 are used, not limited to direct inputs. Sodium ... - Issues: Interpretation of Notification 201/79, dated 4-6-1979 regarding the exemption of excisable goods; Whether sodium sulphate qualifies as an input for the manufacture of paper.Interpretation of Notification 201/79, dated 4-6-1979:The appeal before the Appellate Tribunal CEGAT Bombay involved the correct construction of Notification 201/79, dated 4-6-1979. The Asstt. Collector of Central Excise, Dn. Chandrapur interpreted the notification to mean that the exemption would apply only if the goods were used as inputs in the manufacture of excisable goods. However, the Tribunal disagreed with this interpretation, stating that the notification exempts all excisable goods in the manufacture of which goods falling under Item 68 have been used, without restricting it to goods used as inputs. The Tribunal clarified that goods used in the manufacture of exempted goods are referred to as inputs for convenience, but the exemption is not limited to goods directly used as inputs. The Tribunal emphasized that sodium sulphate, in this case, is consumed in the manufacture of paper and is essential for the process, even though it loses its identity in the final product.Qualification of Sodium Sulphate as an Input:The dispute also revolved around whether sodium sulphate qualifies as an input for the manufacture of paper. The departmental representative argued that sodium sulphate is used for the processing of white liquor, which is then used in the pulping process, contending that it is not directly used in the manufacture of paper. On the other hand, the respondents' advocate highlighted that sodium sulphate is essential for processing white liquor, necessary for the pulping process in the factory. The advocate referenced industry literature to support the importance of sodium sulphate in producing better quality paper. The Tribunal accepted the advocate's arguments, noting that the definition of 'manufacture' under Section 2(f) includes any process incidental to the completion of a manufactured product. Therefore, even essential processes like the use of sodium sulphate should be considered part of the manufacturing process. The Tribunal also agreed that the term 'manufacture' in the notification should be interpreted based on the definition in the parent statute, concluding that sodium sulphate is indeed used in the manufacture of paper in the respondents' factory.Conclusion:After examining the submissions from both parties, the Tribunal concluded that the interpretation of Notification 201/79, dated 4-6-1979 by the Asstt. Collector was incorrect. The Tribunal found that sodium sulphate is indeed used in the manufacture of paper in the factory, dismissing the appeal filed by the Asstt. Collector of Central Excise, Dn. Chandrapur. The judgment highlighted the essential role of sodium sulphate in the manufacturing process and emphasized that even ancillary processes should be considered part of the manufacturing activity.