1987 (5) TMI 255 - AT - Central Excise

Appellate Tribunal: Acetone qualifies as input for exemption under Notification No. 201/79-CE

The Appellate Tribunal CEGAT, New Delhi held that the respondent was eligible for exemption under Notification No. 201/79-CE for Acetone in dissolved ... Set-off of duty Issues:1. Eligibility of the respondent for exemption under Notification No. 201/79-CE for Acetone in dissolved Acetylene.Detailed Analysis:The appeal before the Appellate Tribunal CEGAT, New Delhi involved the question of whether the respondent is entitled to the benefit of exemption under Notification No. 201/79-CE for Acetone used in dissolved Acetylene. The issue was whether Acetone qualifies as an input for the purpose of the notification concerning dissolved Acetylene. The Collector of Central Excise (Appeals) had ruled in favor of the respondent, prompting the Revenue to appeal to the Tribunal.The notification in question exempts excisable goods from duty if goods falling under Tariff Item 68 have been used as raw materials, subject to fulfilling specified conditions. It was undisputed that the respondent met these conditions, and the acetone used in dissolved acetylene was duty paid. Despite attempts to obtain a copy of a relevant judgment, the appeal proceeded based on available material.The debate centered on whether acetone in dissolved acetylene should be considered an input or merely a solvent. The Departmental Representative for the appellants argued that acetone's presence in dissolved acetylene was as a solvent, not as an input in the manufacturing process. However, references were made to chemical technology sources indicating acetone's role in dissolving and storing acetylene, essential for safe transportation and marketing. The Tribunal noted that the exemption was claimed at the dissolved acetylene stage, not at the acetylene stage.The Tribunal referred to a Supreme Court decision interpreting the expression 'in the manufacture of goods,' emphasizing that processes integral to production qualify for special treatment. Considering the essential role of acetone in dissolved acetylene production, the Tribunal upheld the Collector of Central Excise (Appeals)'s decision in favor of the respondent. Consequently, the Tribunal dismissed the Revenue's appeal and upheld the lower authority's order.