Raw material test for exemption fails where carbon paste is only an aid to electrical delivery in manufacturing.

Carbon paste used in electrodes for manufacturing calcium carbide was held not to be raw material under Notification No. 201/79-C.E. because the electrode only served to deliver current to the lime and coke mass. The Tribunal treated the paste as an auxiliary aid in the manufacturing process, not a source or constituent of the finished product, and applied the same principle previously used in relation to ferro alloys. As a result, the exemption claim failed and the benefit of the notification was denied.

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Issues: Whether carbon paste used in electrodes for the manufacture of calcium carbide qualified as raw material for the purpose of Notification No. 201/79-C.E.

Analysis: Carbon paste was used in the electrode, and the electrode functioned only as a device for delivering current to the mass of lime and coke. Its use was thus auxiliary to the process and did not make it a source or constituent of the final product. The Tribunal treated the earlier view that carbon paste was not a raw material in the manufacture of ferro alloys as applicable by analogy, and found no inconsistency with the general principle that the character of raw material depends on the circumstances of the manufacture.

Conclusion: Carbon paste used in the electrode for manufacturing calcium carbide was not raw material and did not qualify for the benefit of Notification No. 201/79-C.E.; the claim was rejected in favour of Revenue.

Final Conclusion: The exemption benefit was denied because the material was held to be only an aid to electrical delivery in the manufacturing process and not a raw material used in the production of calcium carbide.

Ratio Decidendi: A material used merely as an aid in the operation of a manufacturing process, and not as a source or constituent of the finished product, is not raw material for exemption under Notification No. 201/79-C.E.

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