Catalyst not raw material under excise concession; factory-use exemption also fails under strict notification construction.

Platinum/rhodium gauges used only as a catalyst in nitric acid manufacture were not treated as raw material or component parts under Rule 56C of the Central Excise Rules, 1944, because a catalyst facilitates the reaction but does not become part of the finished product. The claim for movement under the special procedure therefore failed. The same goods also did not qualify for exemption under Notification No. 118/75-C.E., because that relief was confined to goods manufactured in the assessee's factory for use there or in another factory of the same manufacturer, and the secondary manufacturer's premises could not be treated as the assessee's factory. The exemption was construed strictly, so the appeal failed.

---

---

Issues: (i) Whether platinum/rhodium gauges used as a catalyst in the manufacture of nitric acid could be treated as raw material or component parts for the purpose of Rule 56C of the Central Excise Rules, 1944; (ii) Whether the gauges were entitled to exemption under Notification No. 118/75-C.E. dated 30-4-1975 as goods manufactured in a factory for use in the same factory or another factory of the same manufacturer.

Issue (i): Whether platinum/rhodium gauges used as a catalyst in the manufacture of nitric acid could be treated as raw material or component parts for the purpose of Rule 56C of the Central Excise Rules, 1944.

Analysis: The special procedure under Rule 56C permitted movement of finished goods to the primary manufacturer for use as raw materials or component parts in the manufacture of excisable goods. The gauges were not themselves consumed as an ingredient of the finished product; they merely facilitated the chemical reaction. A catalyst does not become part of the finished goods and is not converted into the product manufactured.

Conclusion: The gauges could not be treated as raw material or component parts and the claim under Rule 56C failed, against the assessee.

Issue (ii): Whether the gauges were entitled to exemption under Notification No. 118/75-C.E. dated 30-4-1975 as goods manufactured in a factory for use in the same factory or another factory of the same manufacturer.

Analysis: The exemption was confined to goods manufactured in a factory and intended for use in that factory or another factory of the same manufacturer. The definition of factory under Section 2(e) of the Central Excises and Salt Act, 1944 was distinct from the limited concept of primary manufacturer under Rule 56C. The secondary manufacturer's premises could not be treated as the appellant's own factory for the purposes of the notification. Exemption notifications must be construed strictly.

Conclusion: The gauges did not satisfy the conditions of the notification and the exemption was unavailable, against the assessee.

Final Conclusion: The appeal failed in full because the goods were neither eligible as raw material under the special procedure nor covered by the exemption notification.

Ratio Decidendi: A catalyst used in manufacture is not raw material or component part for the relevant excise concession, and an exemption notification limited to goods manufactured in the assessee's factory must be construed strictly according to its express terms.

---