Catalyst used in manufacture can qualify for duty set-off when indispensable to production, even if absent from the final product.

Oxalic acid used only as a catalyst in manufacturing phenol formaldehyde resin and PF moulding powder was treated as an eligible input for set-off under Notification No. 201/79, because the decisive test was whether the material was essential and intimately connected with production, not whether it survived in the finished product. Applying the same principle as in the sodium sulphate ruling, an ingredient consumed in the chemical reaction can still qualify as raw material if its use is indispensable to manufacture. On that basis, oxalic acid qualified for duty relief despite not forming part of the final product.

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Issues: Whether oxalic acid used only as a catalyst in the manufacture of phenol formaldehyde resin and PF moulding powder, and not forming part of the final product, was eligible for set-off of duty under Notification No. 201/79 dated 4-6-1979.

Analysis: The notification granted relief where excisable goods were manufactured using goods falling under Item 68 as raw material or components as inputs. The determining factor was not whether the input survived in the end-product, but whether it was essential to the manufacturing process and so intimately connected with production that the end-product could not emerge without it. Applying the principle recognised in the decision on sodium sulphate, even an ingredient consumed in the chemical reaction or functioning as a catalyst could qualify as raw material if its use was indispensable to manufacture.

Conclusion: Oxalic acid qualified for set-off as an eligible input used in manufacture, even though it acted only as a catalyst and did not form part of the final product.

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