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Collector of Central Excise Vs. Muthu Chemical Industries - Court Judgment

LegalCrystal Citation
CourtCustoms Excise and Service Tax Appellate Tribunal CESTAT Tamil Nadu
Decided On
Reported in(1986)(6)LC654Tri(Chennai)
AppellantCollector of Central Excise
RespondentMuthu Chemical Industries
Excerpt:
.....- a order no. a 545/83 dated 21.11.83 (cegat) -1984(15)e.l.t. 151 (tribunal); he suggests that carbon paste is neither in its natural nor in the semi-manufacture state but a finished product itself at the time of being put to use in the manufacture of calcium carbide. hence it is not a raw material.2. at the time of 'hearing sdr referred to the decision of the tribunal in the case of "ferro alloys corporation ltd. v. collector of central excise, guntur" - ed (t) (mas) 14/82 - wherein this bench has held that carbon paste used in a continuous cast electrode, in the manufacture of ferro alloys is not a raw material for the purposes of notification no.201/79. it was stressed that carbon paste is used pure and simple in the electrodes and has nothing to do with the final article, namely.....
Judgment:
1. The Asstt. Collector of Central Excise, Madurai, I Division, accepted the plea of the respondents, M/s. Muthu Chemical Industries, Kappalur that carbon electro-paste was entitled to the benefit of Notification No. 201/79 when used in the manufacture of calcium carbide. At the instance of the Collector of Central Excise, Madurai, an application was lodged with the Collector of Central Excise (Appeals), Madras. By this he seeks modification of the order of the Asstt. Collector. The Collector (Appeals) referred to the decision of this Bench in Appeal No. ED (MAS) 368/83 dated 21-3-84 in the case of 'Sandur Manganese and Iron Ores Ltd., Yeshwantpur v. Collector of Central Excise, Bangalore'. Following the rationale of that decision he found no merit to modify the order of the Asstt. Collector. The Collector of Central Excise, Madurai has now come up in appeal against the order of Collector (Appeals) referred to supra, urging that the process of manufacture of calcium carbide by Muthu Chemical Industries is distinguishable from the process of manufacture of iron/steel by Sandur Manganese and Iron Ores Ltd. in respect of the equipment used, process of manufacture etc. The earlier decision of the S.R.B. in regard to Sandur's case could not be applied. He also referred to the following decisions of the Karnataka High Court, the Delhi High Court and the Special Bench of this Tribunal :- (i) 'State of Karnataka v. B.V. Aswathanarayana Setty and borthers' -(1980) 46 STC 466 at 469 (Karn.) (ii) Commissioner, Sales Tax v. Standard Metal Industries - (1980) 45 STC 229 at 231 (Delhi) ; (iii)Mangala Brothers, Bombay v. Collector of Customs, Bombay -Special Bench - A order No. A 545/83 dated 21.11.83 (CEGAT) -1984(15)E.L.T. 151 (Tribunal); He suggests that carbon paste is neither in its natural nor in the semi-manufacture state but a finished product itself at the time of being put to use in the manufacture of calcium carbide. Hence it is not a raw material.

2. At the time of 'hearing SDR referred to the decision of the Tribunal in the case of "Ferro Alloys Corporation Ltd. v. Collector of Central Excise, Guntur" - ED (T) (MAS) 14/82 - wherein this Bench has held that carbon paste used in a continuous cast electrode, in the manufacture of ferro alloys is not a raw material for the purposes of Notification No.201/79. It was stressed that carbon paste is used pure and simple in the electrodes and has nothing to do with the final article, namely calcium carbide.

3. The representative of the respondent referred to the decision of the Tribunal in the case of 'Rajalakshmi Paper Mills Pvt. Ltd. v. Collector of Central Excise, Madurai' - ED (MAS) No. 20/84 dated 7.1.85 - wherein it has been observed that following the decision of the Tribunal in the case of 'Sandur Manganese and Iron Ores Ltd. v. CCE Bangalore' (Appeal No. ED (MAS) 368/83) the term 'raw material' has to be interpreted in accordance with the circumstances of each case; materials normally used in the commercial manufacture of paper (of a particular commodity) and are essential for the production of quality paper (that commodity) of acceptable standards should be treated as raw material for the purpose of Notification No. 201/79. Elaborating, he referred to the process of manufacture that it would be a product of conversion of lime stone, hard coke, charcoal and soft coke which is heated to high temperature by means of electrical energy. In the process, following chemical reaction takes place : (ii) Shreves Chemical Process Industries - George T. Austin (Pages 264/265) ; (iii) Treatise on Inorganic Chemistry - H. Remy Page 438 to indicate the use of carbon paste in electrodes and calcium carbide. He made broad reference to Table 99 occurring at page 500 of the first book viz. Electrochemical Engineering which is a 'distribution of raw material constituents' wherein 20 pounds of carbon has been shown under the column 'Electrodes'.

4. L note that carbon paste is used in an electrode which is primarily a device for the delivery of current to the mass of lime and coke and electrodes used in the process of functioning; is used up - like in the case of carbon rodes used in a cine projector. The mere use of the electrodes cannot by itself indicate that it is a raw material in the process of manufacture. This Bench had occasion to examine the role of continuous process of electrodes in another connection namely the manufacture of ferro alloys - vide order in appeal No. ED (MAS) 14/82 "Ferro Alloys Corporation Ltd. v. CCE, Guntur". After a detailed study it was held that carbon paste is not a source of carbon in the manufacture of ferro alloys and cannot be treated as a material for the purpose of Notification No. 201/79. On analogy the cabon paste used in an electrode in the manufacture of calcium carbide cannot be treated as a raw material, electrode being merely a device for delivery of current into the material for reaction. The reference to the general principle stated in the case of Rajalakshmi Paper Mills (Appeal No. ED (MAS) 20/84) is not inconsistant with the above decision of the Bench.

5. Accordingly, I set aside the orders of the Collector (Appeals) and the Asstt. Collector and disallow the claim that carbon paste used in the manufacture of electrode/calcium carbide is entitled to Notification No. 201/79.


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