Consumables used in manufacture can qualify for exemption where they are not the raw materials for production.

Imported items used in the manufacture of Hydrogen Peroxide were treated as consumables rather than raw materials because the Revenue did not produce evidence that they were essential inputs for manufacture, and the respondent consistently maintained that the actual raw materials were different. On that basis, the notification benefit was considered available for finished goods cleared to the domestic tariff area, with reliance placed on an earlier ruling treating consumables as within the scope of the exemption. The Revenue's appeals were therefore rejected.

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Issues: Whether the imported items used in the manufacture of Hydrogen Peroxide were raw materials or merely consumables, and whether the finished goods cleared to the domestic tariff area were entitled to exemption under Notification No. 8/97-C.E. dated 01.03.1997.

Analysis: The items imported and consumed in the manufacturing process were found to be consumables and not raw materials. The Revenue did not adduce evidence to establish that those items were raw materials or inputs required for manufacture of Hydrogen Peroxide. The respondent's consistent stand was that the essential raw materials were different from the imported items in dispute. The issue was also treated as settled by the decision relied upon regarding the use of consumables for the benefit of the notification.

Conclusion: The exemption was held to be available and the Revenue's appeals were rejected.

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