Consumable rather than raw material: wax used in yarn manufacture could not defeat notification benefit, and the demand was time-barred.

Wax used in yarn manufacture was treated as a consumable, not a raw material, because it served only to improve weaving performance, did not remain in the final product, and was removed before dyeing. On that basis, the assessee retained the benefit of Notification No. 8/97-CX. The demand was also held time-barred because the department already knew of the imported wax through declarations, correspondence, and unit-level control, so suppression was not established and the extended limitation period could not be invoked. The impugned order was set aside with consequential relief.

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Issues: (i) Whether wax used in the manufacture of yarn was a raw material or only a consumable for the purpose of Notification No. 8/97-CX. (ii) Whether the demand was barred by limitation in the absence of suppression.

Issue (i): Whether wax used in the manufacture of yarn was a raw material or only a consumable for the purpose of Notification No. 8/97-CX.

Analysis: The evidence on record, including expert opinion and technical material, showed that wax was used only to improve weaving performance, did not remain as part of the final product, and was removed before dyeing. The essentiality test applied to raw material was not satisfied, and the Board's circulars clarified that consumables would not disentitle the benefit of the notification.

Conclusion: The wax was a consumable and not a raw material, so the assessee remained entitled to the notification benefit.

Issue (ii): Whether the demand was barred by limitation in the absence of suppression.

Analysis: The record showed that the use of imported wax was within the department's knowledge through declarations, correspondence, and departmental control over the unit. In such circumstances, suppression could not be alleged and invocation of the extended period was not justified.

Conclusion: The demand was time-barred.

Final Conclusion: The appeal succeeded on merits as well as on limitation, and the impugned order was set aside with consequential relief.

Ratio Decidendi: A material used only as a manufacturing consumable, which does not form part of the final product, cannot be treated as a raw material for denying notification benefit, and the extended limitation period cannot be invoked where the department had knowledge of the relevant facts.

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