1987 (5) TMI 133 - AT - Central Excise

Tribunal grants excise duty credit for Cryolite, Aluminium Fluoride, and Fluorspar as raw materials

INDIAN ALUMINIUM COMPANY LTD. Versus COLLECTOR OF CENTRAL EXCISE, BANGALORE

INDIAN ALUMINIUM COMPANY LTD. Versus COLLECTOR OF CENTRAL EXCISE, BANGALORE - 1987 (30) E.L.T. 514 (Tribunal) Issues:1. Interpretation of Notification 201/79 and its amendment by Notification 105/82 regarding excise duty credit on raw materials for manufacturing aluminium.2. Determination of whether Cryolite, Aluminium Fluoride, and Fluorspar are considered raw materials under the said notifications.3. Application of previous tribunal rulings in similar cases to the current situation.4. Assessment of whether the chemicals in question are essential raw materials for the manufacturing process of aluminium.Analysis:1. The case revolved around the interpretation of Notification 201/79 and its amendment by Notification 105/82, concerning the excise duty credit on raw materials used in manufacturing aluminium. The Appellants were denied the credit after the amendment, leading to a show cause notice alleging wrongful credit usage.2. The primary issue was whether Cryolite, Aluminium Fluoride, and Fluorspar qualified as raw materials under the notifications. The Asstt. Collector and the Appellate Collector argued that these chemicals acted as reagents aiding chemical reactions and were not part of the final aluminium product, hence not eligible for the credit.3. The Appellant's counsel cited previous tribunal rulings in similar cases, emphasizing the essential role of certain chemicals in the manufacturing process. The Tribunal's decisions in other cases highlighted the necessity of certain chemicals like Aluminium, Sodium Sulphide Lye, and Barium Carbonate, qualifying as raw materials for excise duty credit.4. The Tribunal analyzed the chemical reactions and industry practices to determine whether the chemicals in question were indeed raw materials for aluminium production. The Appellants provided evidence from industry reports and annual reports categorizing the chemicals as raw materials. The Tribunal concluded that the chemicals were indispensable for the manufacturing process, thus qualifying as raw materials under the notifications.5. The Tribunal emphasized that the term 'raw material' should be understood in the industry context and trade usage. It was established that even if the materials did not directly go into the finished product, their essential role in the manufacturing process qualified them as raw materials. The decision was influenced by the fact that the chemicals were crucial for the production of aluminium.6. Ultimately, applying the principles established in previous tribunal rulings and industry practices, the Tribunal held that the Appellants were entitled to the benefit of the notifications. The impugned order denying the excise duty credit was overturned, and the Appeal was allowed in favor of the Appellants.