Broader input exemption under Notification No. 201/79-C.E. covered electrodes used in caustic soda manufacture.

Notification No. 201/79-C.E. used the term "inputs" in a broad sense, covering Tariff Item 68 goods used in the manufacture of excisable products and not limiting relief to raw materials directly entering the final product. Electrodes used in electrolytic cells for producing caustic soda were treated as inputs because they participated directly in the manufacturing process, were consumed over time, and had a clear nexus with production. The later amendment by Notification No. 105/82-C.E. was seen as consistent with that interpretation, so the exemption was available and the Revenue's objection failed.

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Issues: Whether electrodes used in electrolytic cells for manufacture of caustic soda were eligible as "inputs" for benefit under Notification No. 201/79-C.E., and whether the notification required the item to be raw material directly entering the final product.

Analysis: The notification was held to use the expression "inputs" in a wide sense, extending beyond raw materials to goods falling under Tariff Item 68 that are used in the manufacture of other excisable goods. The electrodes, though forming part of the electrolytic cell, were found to participate directly in the manufacturing process, to be consumed over time, and to have a clear nexus with the production of caustic soda. The later amendment by Notification No. 105/82-C.E. was also viewed as consistent with this broader understanding of the exemption.

Conclusion: The electrodes were eligible for the benefit of Notification No. 201/79-C.E., and the Revenue's objection was rejected.

Ratio Decidendi: For the purpose of Notification No. 201/79-C.E., goods falling under Tariff Item 68 are not confined to raw materials; any such goods used in relation to and with nexus to the manufacture of the finished excisable product qualify as inputs if they participate in the manufacturing process.

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