2018 (6) TMI 328

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....Sl. No. 3 of Notification No. 23/2003-CE dated 31.03.2003. This exemption notification is subject to the condition that the goods are manufactured wholly from the raw materials produced or manufactured in India. The assessee had procured material like Methyl Iso Butyl Ketone, Hexane, Methanol, Isopropl Alchocol IP etc. from their sister units or from dealers who had imported the goods and sold to the assessee. Thus, these goods were imported and not domestically manufactured. It is the case of the Revenue that since respondent used material which were imported, and hence are not entitled to the benefit of notification No. 23/2003-CE. Show cause notices were issued to the assessee and the demand was confirmed by the Additional Commissioner i....

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....) The Commissioner (Appeals) has also erred in relying on the Board's circular No. 389/22/98, dated 05.05.1998 which clarified that the benefit of notification No. 8/97 should be allowed even if imported consumables are used. This circular was superseded by Board's circular No. 614/5/2002-CD, dated 31.01.2002. It was clarified in this circular that the benefit of notification No. 8/97 is not allowed even if imported consumables are used. 3. The Department relied upon the case of Ballarpur Industries Limited [1989(43) ELT 804 (S.C)] in which the Apex Court held that the expression "raw material" is not a definite term. In the case of chemical technology, the ingredients used may be (a) of those which may retain their dominant individual i....

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.... benefit of notification 8/97 available to the assessee? (b) whether the goods in question are consumables or raw materials. 6. As far as (a) above is concerned, the issue is no longer res integra as the Hon'ble Supreme Court in the case of Vanasthali Textiles Industries Limited (supra) and followed by Tribunal in the case of Premium Tools Pvt. Ltd. (supra) held that the benefit of notification No. 8/97 is available even if the final products are manufactured using imported consumables because the limitation when the notification is only that the goods should be manufactured using raw materials manufactured or produced in India. There is no restriction that the consumables which are used in the manufacture also have to be domest....