Consumables in granite polishing qualify for exemption when they do not remain in the finished product and are removed during processing.

Epoxy resin and agar used in polishing granite slabs were treated as consumables rather than raw materials because they were applied only to fill fissures, pores and cracks, did not remain in the finished granite, and were eliminated during polishing. The applicable test was whether the ingredient enters the end-product or is instead used in the manufacturing process as part of the apparatus; materials that do not survive in the finished product fall on the consumables side of that line. Board circulars, Development Commissioner clarifications, and earlier decisions on similar processing materials supported exemption eligibility, so the denial of exemption was set aside and the revenue appeal failed.

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Issues: Whether epoxy resin and agar used in polishing granite slabs were consumables and not raw materials, so as to remain eligible for the exemption benefit claimed by the assessees.

Analysis: The applicable test is whether the ingredient goes into the making of the end-product in the sense that, without it, the presence of the end-product is rendered impossible, and whether it is used in the manufacturing process rather than as part of the manufacturing apparatus. On the facts, the disputed materials were used only for filling fissures, pores and cracks in a limited number of slabs, did not remain with the polished granite, and were eliminated during polishing. The Board circulars and the clarifications issued by the Development Commissioners supported the view that such items were consumables. The earlier decisions applying the same test to similar processing materials were held to govern the present cases.

Conclusion: Epoxy resin and agar were held to be consumables and not raw materials, and the denial of exemption was set aside. The assessees succeeded and the revenue appeal failed.

Ratio Decidendi: A material used in the manufacturing process which does not form part of the finished product and is eliminated before the product emerges is to be treated as a consumable, not a raw material, for exemption purposes.

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