1. By his Order No. C.V/19/30/18/83, dated 21-6-83, the Assistant Collector of Central Excise, Tirunelveli, decided that M/s. Madura Coats Limited, Aladiyur, the appellants herein are not eligible to avail of the concessions contained in Notification No. 201/79 in respect of Sodium Aluminate and Sulphate of Alumina claimed to be used in the manufacture of paper. He also ordered that the credit of duty on the chemical availed of after 10-7-82 be reversed. In coming to the conclusion, the Assistant Collector took note that ferric alum is used to process water which in turn is used in the processing of cloth. If the water is not pure, the cloth will become stained during processing.
2. In appeal, the Collector of Central Excise (Appeals), Madras, confirmed the order of the Assistant Collector observing that out of the impugned chemicals, neither cotton fabrics could be made nor cotton fabrics be bleached. Hence, the chemicals cannot be considered as raw materials for the manufacture of bleached or other processed cotton fabrics. He ordered debit of credit of duty already availed of on the two chemicals in question into the RG 23 Account or the account-current if the former course is not available.
3. In the appeal before me, the Consultant for the appellants explained the use of Sodium Aluminate and Sulphate of Alumina. Water used for the bleaching of man-made fabrics or cotton fabrics has to be free from suspended impurities and has to be neutral with pH factor of 7. Both the chemicals help in the coagulation and settlement of fine suspended impurities in water and also help to alter the pH factor of the water to 7. In this connection, he referred to the decision of this Tribunal in the case of Seshasayee Paper and Boards Limited v. Collector of Central Excise, Coimbatore in ED (MAS) 58 of 84, 1985 (21) E.L.T. 193 (Tribunal) in paragraph 4 of which it has been held that alum added to the pulp stock and intended for the precipitation and fixation of resin and dye-stuff which also helps to maintain pH (acidity) value of the pulp on the wire in the paper machine and that the appellant is entitled to the concession under Notification No. 201/79. In the present case also, the chemicals help to maintain pH value of water and hence should be given the same treatment. He also referred to another decision of this Tribunal in the case of Sir Silk-Limited v. Collector of Central Excise, Hyderabad in ED (MAS) 174/83 wherein in paragraph 4, the Tribunal has held that Calcined Magnesite Powder used for neutralising sulphuric acid in the manufacture of Cellulose Acetate is entitled to the benefit of Notification No. 201 of 1979.
4. Senior Departmental Representative on the other hand pointed out that what the Tribunal has decided is that Ferric Alum used for water purification by itself is not entitled to the concession. Creation of a favourable pH value is an incidental effect which by itself cannot be a deciding factor. He also generally distinguished the decision referred to by the Consultant as not relevant to the present case.
5. In the course of decisions of this Tribunal, it has been held that it is not possible to lay down hard and fast rules as to what constitutes "raw material". The decision will have to depend on the circumstances of each case, namely, the nature of the materials, the manner in which it is used, the type of processes employed, the economic status of such a process and the like. We have also held that where a product enters into chemical reaction and the like-in a process of manufacture, the raw materials that go to produce the various chemicals will not themselves qualify for the benefits of Notification No. 201/79. As correctly pointed out by the SDR, when ferric alum is used only for water purification, it is not entitled to the benefits of Notification. In the present case, sodium aluminate and sulphate of alumina are used for removal of suspended impurities and change the pH factor to neutral. In other words, the presence of some salt or chemicals in the water makes it either acidic or alkaline and the chemical impurities are removed to make the water exactly neutral (pH=7). Quite apart from this, we are informed that in bleaching of fabrics, a certain amount of alkalinity is desirable; in fact, a pH value of about 11 is created in such situations by the addition of bleaching powder. Thus, we find that the two chemicals which are the subject-matter of appeal before me are merely used for water purification and are not directly used or usable in the process of manufacture of yarn/fabrics.