Raw material test for excise exemption: barium carbonate used in brine purification qualified for notification benefit.

Barium carbonate used in the purification of brine for manufacture of caustic soda qualified as a raw material for Notification No. 201/79-C.E., as amended. The relevant test was whether the item formed part of the manufacturing stream and was used in the process of manufacture so as to contribute to the final excisable goods, even if it did not remain physically present in the end product. Because caustic soda production began with preparation and purification of brine, and barium carbonate was consumed at that stage and lost its identity during purification, it satisfied the notification's raw material requirement. The assessee was therefore entitled to the notification benefit.

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Issues: Whether barium carbonate used in the purification of brine for manufacture of caustic soda qualified as a raw material for the purposes of Notification No. 201/79-C.E., as amended by Notification No. 105/82-C.E.

Analysis: The relevant test was whether the item formed part of the manufacturing stream and was used in the process of manufacture so as to contribute to production of the final excisable goods, even if it was not physically present in the end product. The manufacture of caustic soda was found to begin with preparation and purification of brine, and barium carbonate was used at that stage to purify the brine before electrolysis. Since the material was consumed in the process and lost its identity during purification, it fell within the meaning of raw material for the notification.

Conclusion: Barium carbonate was held to be a raw material used in the manufacture of caustic soda, and the assessee was entitled to the notification benefit.

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