Customs, Excise and Gold Tribunal - Tamil Nadu
Andhra Pradesh Paper Mills Ltd. vs Collector Of Central Excise on 18 October, 1985
Equivalent citations: 1986(6)ECR611(TRI.-CHENNAI), 1985(24)ELT322(TRI-CHENNAI)
ORDER C.T.A. Pillai, Member (T)
1. As the two appeals arise from out of a single order No. 39/82 dated 30-11-82 of the Assistant Collector of Central Excise, Rajahmundry and involve similar issues they are being disposed of by this common order.
2. By order dated 30-11-82 the Asst. Collector of Central Excise, Rajahmundry disallowed a claim of the appellants for grant of benefit of Notification No. 201/79 dated 4-6-1979 in respect of the following items :-
(i) Alumina Ferric;
(ii) Sodium Sulphate;
(iii) China Clay; (iv) Glue powder; (v) Soap stone powder; (vi) Rosin; (vii) Acetic Acid; (viii) Sulphuric acid powder (clarified as sulphamic acid powder); and (ix) Alfoc powder,
on a finding that a raw material claimed to be used in the manufacture it should be found in the analysis of the final finished product. He, however, allowed the claim in respect of burnt lime. The appellants went in appeal to the Collector of Central Excise (Appeals), Madras against the refusal to grant the benefit in respect of all the items other than the Burnt Lime. That authority observed that though the nine items are no doubt used in the manufacture of paper, they do not constitute raw material of paper, as paper cannot be produced or made out of such material through any process of manufacture. They are only chemicals. He thus upheld the decision of the Asst. Collector. In respect of burnt lime the Department went in appeal to the Collector of Central Excise (Appeals) pursuant to an order under Section 35E(2) of the Act issued by the Collector of Central Excise, Guntur. Here too the Collector (Appeals) reversed the decision of the Assistant Collector on a finding that paper cannot be manufactured by subjecting burnt lime to any process; hence it was not entitled to the benefit of the notification. The appellants are before us against these two orders of the Collector (Appeals) referred to above.
3. In so far as Alfoc powder is concerned the representative of the appellants dropped the claim. In respect of Sodium sulphate, Alumina ferric, Rosin, Acetic acid and Sulphamic acid powder, he relied on the decision of this Bench of the Tribunal in the case of 'Rayalaseema Paper Mills v. Collector of Central Excise, Hyderabad-ED (MAS) No. 399/83 and 157/84 dated 15-2-85-wherein the Tribunal has accepted that these are raw materials used in the manufacture of paper for purposes of Notification No. 201/79. In respect of China clay, glue powder and Soap stone powder which are claimed as used as sizing material in the manufacture of paper and hence would be entitled to be treated as raw material. Adverting to burnt lime he referred to the case of Seshasayee Paper and Boards Ltd. v. Collector of Central Excise, Coimbatore- ED(MAS) 58/84 dated 16-11-1984-1985 (22) E.L.T. 163-dealt with by this Bench of the Tribunal in which Fluo solid lime has been given the benefit of the notification. The representative explained that fluo-solid lime is the same as burnt lime. It is used in a manner similar to the use of sodium sulphate and it should also be given the benefit of notification. In this connection, he referred to the observations of the Tribunal in the case of Kerala Electric Lamp Works v. Collector of Central Excise, Cochin-ED(MA$) No. 281/83 dated 21-1-1985-in which this Bench had observed :-
"5. This Bench had occasion to examine the scope of the term 'raw material' occurring in Notification No. 201/79. It has consistently held that it is not necessary for a raw material to be present in the finished product to entitle it to the concession under the notification. The entitlement will depend upon the process involved; the manner of usage of the material, essentiality recognition of the products in the process of manufacture and the like."
He claimed that burnt lime satisfies the criterion followed by the Bench in this case. He also referred to the decision of the 'C' Bench of this Tribunal in the case of Collector of Central Excise, Bhubaneshwar v. Titaghur Paper Mills 1985 (21) E.L.T. 901-and in particular to para 4 thereof, wherein the Bench has observed that, "...There is no authority to say that an input or raw material must go directly into the finished product. As long as it is consumed and utilised in a way that results or helps in the production or manufacture of the article in which the system is engaged, it is a raw material and is an input for that finished product."
4. The Senior Departmental Representative, on the other hand, pointed out that burnt lime is not used in the manufacture of paper as such; in fact this Bench has held to the contrary in later cases. He was inclined to disagree with the extension of the benefit to sulphamic acid powder in that it is used to prevent degradation of fibre in pulp and is not present in the finished product. In regard to lime he stated that it is also used in the bleaching of pulp along with chlorine resulting in the production of calcium hydrochlorite. Following the decision in the case of 'Rayalaseema Paper Mills' lime used in the bleaching of pulp should not be given the benefit of notification.
5. We have considered the arguments of both sides. As early as in March 1984 in dealing with the case of Sandur Manganese and Iron Ores Ltd. v. Collector of Central Excise, Bangalore-ED(MAS) 368/83 dated 21-3-84- this Bench had occasion to observe, "...there is no definition of raw material in the notification. What constitutes raw material will depend upon the facts and circumstances of each case."
Following the general approach and the earlier decisions of this Tribunal in respect of similar materials, we agree that the following items are entitled to the benefit of Notification No. 201/79 :--
(i) Alumina Ferric, used in the preparation of pulp as distinct that used in the purification of water;
(ii) Sodium Sulphate; (iii) China clay; (iv) Glue powder; (v) Soap stone powder; (vi) Rosin; (vii) Acetic Acid; and (viii) Sulpharoic acid powder.
In particular we do not agree with the view canvassed by S.D.R. that Sulphamic acid powder does not serve any essential purposes in the manufacture of paper; it helps to prevent the degradation of fibre in pulp and is used in a normally commercial recognised product with a definite objective.
6. So far as burnt lime is concerned the argument on behalf of the appellants is that it is the same as fluo-solid lime in respect of which benefit has been given in the case of Seshasayee Paper and Boards Ltd.-ED(MAS) 58/84. In the case of Rayalaseema Paper Mills Ltd. v. Collector of Central Excise, Hyderabad--ED(MAS) No. 399/83 and 157/84-we had occasion to examine the status of burnt lime in respect of Notification No. 201/79 and we had observed therein :-
"11. As regards burnt lime, it is found to be used firstly in the soda recovery cycle to convert sodium carbonate in the green liquor to sodium hydroxide. It is thus a chemical for the recovery of sodium hydroxide and is not a raw material for the manufacture of pulp. Secondly, it is used in the preparation of calcium hydrochlorite--a bleaching agent--using chlorine. It is thus not a raw material in the manufacture of pulp but one for the manufacture of a bleaching chemical. In either case it is not entitled to the benefit of Notification No. 201/79."
In fact the appellants in that case sought an amendment of that order citing the case of Seshasayee Paper and Boards--ED (MAS) 58/84--in the case of fluo-solid lime in support. In para 4 of our Order No. E/ROM/77/85-MAS (E/399/83 and 157/84) dated 11-7-1985, we have observed as follows :
"4. In passing we would like to record that at the time the appeal was heard the plea that burnt lime and fluo solid lime are one and the same product had not been taken. We also note that in para 6 of the order of the Tribunal in the Seshasayee case it is merely stated, '... and Fluo solid lime used for the bleaching of pulp....' the article being dealt with in a general way, clubbed with others. In the present case the finding on record is that, 'As regards burnt lime, it is found to be used firstly in the soda recovery cycle to convert sodium carbonate in the green liquor to sodium hydroxide. It is thus a chemical for the recovery of sodium hydroxide and is not a raw material for the manufacture of pulp. Secondly, it is used in the preparation of calcium hydrochlorite--a bleaching agent--using chlorine. It is thus not a raw material in the manufacture of pulp but one for the manufacture of bleaching chemical. In either case it is not entitled to the benefit of Notification No. 201/79.' If anything in the 'Seshasayee' case the issue has not been gone into in detail regarding the use of Fluo-Solid Lime, whereas in the present case (Sree Rayalaseema Paper Mills case) such an enquiry has been undertaken and a finding recorded."
Thus, if anything the decision in the case of Fluo-solid lime was rendered in the case of Rayalaseema Paper Mills Ltd. (EDM 399/83 and 157/84) in the absence of full details regarding the use of the article which was not canvassed fully before the Tribunal at the relevant time. In so far as the decision of the 'C' Bench of the Tribunal in the case of 'Titaghur Paper Mills' is concerned, we are afraid we are unable to agree that raw materials which are used in the production of chemicals which are indirectly used in the manufacture of pulp/ paper would be entitled to the benefit of Notification No. 201/79.
7. Thus the order of the Collector of Central Excise (Appeals) in respect of Burnt lime is upheld and the appealing thereto (E/149/84) dismissed.