Raw material exemption for manufacturing inputs extends to chemicals functionally used and consumed, even if not part of the finished product.

The expression "raw material" in the exemption notification was not limited to substances physically incorporated into the finished aluminium product. Chemicals used in electrolytic aluminium manufacture qualified where they performed specific functions in the production process and were actually used or consumed, even if not retained in the end product. Prior tribunal reasoning supported this broader functional test. For cryolite, the extent actually consumed remained eligible despite partial recovery and recycling, while unused quantities continued to attract duty under the notification's appendix. On that basis, the chemicals were treated as raw materials only to the extent consumed in manufacture, and the appeal was unsustainable.

---

---

Issues: Whether the six chemicals used in the electrolytic manufacture of aluminium qualified as "raw materials" for exemption under Notification No. 201/79 as amended by Notification No. 105/82.

Analysis: The notification did not define "raw material", and the expression was not confined to substances physically present in the finished product. The chemicals in question performed specific functions in the manufacture of aluminium, aided the production process, and were used and consumed to varying extents. Previous Tribunal decisions on similar inputs supported the view that a substance need not become part of the final product to qualify as a raw material. As regards cryolite, even though a part was recovered and recycled, the quantity actually consumed in the process remained eligible, while unused quantities would remain liable to duty under the appendix to the notification.

Conclusion: The chemicals were raw materials for the purposes of the exemption notification to the extent actually used up or consumed in manufacture, and the appeal was not sustainable.

---