Consumable versus raw material under export exemption turns on functional role, consumption in process, and factual examination.

Imported sizing material or indigo dye used by a 100% export-oriented unit may qualify as a consumable rather than raw material under Notification No. 8/97-CE, depending on its functional role in the manufacturing process. The expression "raw material" was treated in its ordinary trade sense, with emphasis on whether the input is consumed in manufacture, forms part of the end product, and whether its essential presence is required. The Board's circular indicating that imported consumables do not by themselves defeat the exemption was noted. The matter was not finally decided on merits and was remitted for fresh consideration of the relevant factual and legal issues.

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Issues: Whether imported sizing material or indigo dye used by a 100% export oriented unit could be treated as "raw material" so as to deny the benefit of Notification No. 8/97-CE, or whether such material was a "consumable" used in the manufacturing process.

Analysis: The exemption turned on whether the finished goods were manufactured wholly from raw materials produced or manufactured in India. The expression "raw material" is not defined and must be understood in its ordinary trade sense. The Court treated the issue as fact-dependent and noted that the character of the input depends on its role in the manufacturing process, whether it is consumed in the process, whether it forms part of the end product, and whether the dominant ingredient test has relevance. The Board's circular clarifying that imported consumables do not by themselves disqualify the exemption was also noticed. The matter had not been examined on all relevant aspects, including whether the impugned inputs were consumables on the facts and the impact of their cost and indispensability in the process.

Conclusion: The issue was not finally decided on merits and the matters were remitted for fresh consideration of the relevant factual and legal aspects.

Ratio Decidendi: Whether an imported input is "raw material" or "consumable" for Notification No. 8/97-CE depends on its functional role in the manufacturing process and must be determined on the facts of each case, including whether it is consumed in the process and whether the finished product depends on its essential presence.

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