Component status for exemption: cadmium used through an intermediate stage was treated as part of the dry battery cell manufacturing chain.

Cadmium used in the manufacture of zinc callots, later captively consumed for making cans for dry battery cells, was treated as a component of the final product for exemption purposes under Notification No. 201/79. The material was found to be essential in the manufacturing chain, and its presence in the finished battery cells was not in dispute. The emergence of zinc callots as an intermediate product did not break the link to the final product. On that basis, the exemption was held to be available.

---

---

Issues: Whether cadmium used in the manufacture of zinc callots, which were in turn captively consumed for making cans for dry battery cells, qualified as a component of the final product so as to attract exemption under Notification No. 201/79.

Analysis: Cadmium was accepted to be essential for manufacture of cans for dry battery cells, and its presence in the final battery cells was not in dispute. The intermediate emergence of zinc callots did not alter the position, because the intermediate product formed part of the manufacturing chain leading to the final product. On that basis, the material used at an earlier stage was treated as a component of the dry battery cell for exemption purposes.

Conclusion: The exemption under Notification No. 201/79 was held to be available, and the assessee succeeded on the issue.

---