Input tax credit on petroleum coke as raw material, not fuel, where it forms part of the end product in cement manufacture.

Petroleum coke used in cement manufacture was treated as raw material because it was mixed with other ingredients, fed into the kiln as part of the feed stock, and its chemical elements formed part of clinker. The governing test was whether the input played a role in the emergence of the end product, not whether it was consumed in the process or generated heat. It was therefore not used merely as ancillary fuel, and the fuel-based restriction on input tax credit did not apply. The Tribunal's factual findings were not shown to be perverse, so the revenue's challenge failed.

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Issues: Whether petroleum coke used in the manufacture of cement is raw material or fuel, and whether the dealer was entitled to full input tax credit without reduction under the fuel-related restriction.

Analysis: The relevant statutory scheme allowed tax credit for taxable goods used as raw material in manufacture, while requiring reduction of credit for fuels used in manufacture. On the facts found, petroleum coke was mixed with other ingredients in definite proportion, fed into the kiln as part of the feed stock, and its chemical elements formed part of clinker. The governing test was whether the input acquired a role in the emergence of the end product, not whether it was consumed in the process or whether heat was generated during manufacture. Applying that test, the material was not used merely as ancillary fuel; it remained an ingredient of the manufacturing process and contributed to the final product. The factual findings recorded by the Tribunal were not shown to be perverse.

Conclusion: Petroleum coke used in the manufacture of cement was held to be raw material and not fuel, so the reduction of input tax credit under the fuel-related provision was not justified; the revenue's appeals failed.

Ratio Decidendi: An input used as an ingredient in manufacture, and which forms part of the end product or is essential to its emergence, is raw material even if it is consumed or facilitates heat generation during the process; it is not fuel merely because the process involves an exothermic reaction.

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