Activated carbon as manufacturing input qualifies for notification benefit when essential to purification and marketability of aerated waters.

Activated carbon used and consumed in purifying and deodorising syrup for aerated waters was treated as an input in the nature of raw material or component because it was essential to the manufacturing process and to achieving the required flavour, colour, quality and marketability of the final product. Its indirect role, including functioning as a catalyst, did not exclude it from the benefit of Notification No. 201/79-C.E. The assessee was therefore entitled to the notification benefit.

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Issues: Whether activated carbon used for purification and deodorisation of syrup employed in the manufacture of aerated waters qualified as an input in the nature of raw material or component for the purpose of availing the benefit of Notification No. 201/79-C.E. dated 4-6-1979.

Analysis: Activated carbon was used and consumed in the process of preparing the syrup and played an essential role in removing impurities and bad odours so that the finished aerated waters attained the required flavour, colour, quality and marketability. Where an item is utilised in the process of manufacture or in relation thereto, directly or indirectly, and is essential to one or more processes leading to the final product, it is to be treated as an input in the nature of raw material or component. The fact that it functioned as a catalyst did not detract from its role in the manufacturing process.

Conclusion: Activated carbon was rightly treated as an input in the nature of raw material, and the benefit under Notification No. 201/79-C.E. dated 4-6-1979 was available to the assessee.

Ratio Decidendi: An item used and consumed in a process that is essential to manufacture and marketability of the final product constitutes an input in the nature of raw material or component, even if it acts indirectly or as a catalyst.

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