Exemption under Notification No. 8/97-CE turns on strict proof that disputed inputs are consumables, not raw materials.

Imported consumables used in manufacturing do not automatically defeat exemption under Notification No. 8/97-CE if the raw materials otherwise satisfy the notification's condition that they be produced or manufactured in India. However, the assessee must strictly prove that disputed inputs are only consumables and not raw materials. On the record, the claim that the materials were consumables was not satisfactorily established, so they were treated as raw materials for exemption purposes. The exemption was therefore denied, and the Revenue's appeal succeeded.

---

---

Issues: (i) Whether imported consumables used in the manufacture of goods cleared to the domestic tariff area disentitled the assessee from exemption under Notification No. 8/97-CE. (ii) Whether the materials used were consumables or raw materials for the purpose of the notification.

Issue (i): Whether imported consumables used in the manufacture of goods cleared to the domestic tariff area disentitled the assessee from exemption under Notification No. 8/97-CE.

Analysis: The exemption was held to depend on whether the final products were manufactured using raw materials produced or manufactured in India. On the legal question, the settled position was that imported consumables do not by themselves defeat the exemption if the raw materials satisfy the condition in the notification. The benefit of the exemption was therefore not denied merely because consumables were imported.

Conclusion: The legal objection based solely on imported consumables was rejected.

Issue (ii): Whether the materials used were consumables or raw materials for the purpose of the notification.

Analysis: The assessee was required to establish that the disputed inputs were consumables and not raw materials. The record did not contain satisfactory evidence to show that the materials were merely consumables. In exemption matters, the claim must be strictly proved by the person seeking the benefit, and the burden was not discharged on the facts found.

Conclusion: The materials were held not to have been proved as consumables and were treated as raw materials for the purpose of denying the exemption.

Final Conclusion: The order granting exemption was set aside and the Revenue's appeal succeeded, resulting in denial of the exemption benefit to the assessee.

Ratio Decidendi: A claimant to exemption must strictly establish the facts bringing the goods within the exemption, and the mere assertion that inputs are consumables is insufficient when the evidence does not substantiate that claim.

---