TaxTMI 
TaxTMI 
2007 (10) TMI 7
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....ty in terms of Notification NO.8/97-CE dated 1.3.1997 in respect of goods sold in Domestic Tariff Area (in short 'DTA'), which stipulated conditions that the goods have been manufactured wholly from the raw materials produced or manufactured in India. According to the company it procured the raw materials from domestic manufacturers in India and also imported (1) Carboxymethyle Cellulose which is used for sizing of single yarn to give strength to the yarn during weaving after which the woven towels are washed to remove completely the sizing materials and (2) Ultra fresh N.M. which is used for anti bacteria and anti fungus treatment of terry towels. The Commissioner (Appeals) had confirmed the demand of duty on the ground that the sizing materials imported by the company is raw material and as imported raw material has been used, the benefit of Notification No.8/97-CE is not available. 4. According to learned counsel for the appellant the sizing material imported is not raw material but is a consumable as per definition given in para 3.13 of the EXIM Policy. According to the definition of 'Consumable', it means any item which ....
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....cordingly, the appeals were dismissed. It is the assessee's stand in these appeals that the Tribunal had not correctly applied the decision in Ballarpur's case (supra) inasmuch as this Court clearly observed that the said decision was in the facts and circumstances of that matter and no general proposition of law was being laid down. In that case this Court was concerned with Sodium Sulphate which was burnt up in the process of manufacture and other chemical reaction. Additionally, in Ballarpur's case (supra) the manufacturer was not 100% EOU importing any material unlike the present appellant company which is 100% EOU importing material classified under the EXIM Policy as consumable. 6. Stand of the Department-respondent was that imported sizing material was used by the assessee in the manufacture of impugned product and the process of sizing is essential process during the course of manufacture of terry towel because it increased the strength of the yarn and the fibre and thus improves the weaving of the yarn. Therefore, the sizing material is an essential ingredient for weaving of terry towel. Reliance was placed on the decision....
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....se Rules, 1944 (in short the 'Rules') read with proviso to section 11-A(1) of the Central Excise Act, 1944 (in short the 'Act') and also for imposing penalty under section 11-AC of the Act and Rules 173-Q and 209 of the Rules and also for recovery of interest on the duty short paid and with other directions about the confiscation of the land, building, plant and machinery, materials or any other things under Rule 173-Q(2) and Rule 209(2) of the Rules. 11. On 5.6.1998 the appellant filed reply to the aforesaid show cause notice and, thereafter after hearing the learned counsel for the parties the Commissioner, Central Excise and Customs, Indore by order dated 23.6.1999 held that since the raw material has not been defined specifically and also nothing has been brought on record to establish that imported 'Indigo pure' is a raw material known in common trade parlance therefore, the 'Indigo pure' cannot be termed as raw material for production of Denim fabrics and dropped the show cause notice against which the Revenue filed a joint appeal before the CEGAT. 12. The CEGAT allowed the appeal filed by the Reven....
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....nt test is not its absence in the end product, but the dependence of the end product for its essential presence at the delivery end of the process. The ingredient goes into the making of the end product in the sense that without its absence the presence of the end product, as such, is rendered impossible. This quality should coalesce with the requirement that its utilization is in the manufacturing process as distinct from the manufacturing apparatus." 14. CEGAT had held in that case that the use of Indigo dye is a raw material in the manufacture of denim fibre. According to the High Court also the question was whether the use of small quantity of imported dye in bringing the end product into existence, even in that case it can be treated that the finished product has come into existence wholly from cotton. It was held that for the manufacture of denim the basic raw material and the finished product cannot be treated as wholly produced or manufactured from cotton. Therefore, placing reliance on Ballarpur's case (supra) it was held that the finished product is not wholly from basic raw material i.e. cotton but it has to be treated t....