M/S.ASIAN PEROXIDES LTD.versusCOMMNR. OF CENTRAL EXCISE, GUNTUR

                         [2008] 10 S.C.R.132

                                             -
A                  M/S.·ASIAN PEROXIDES LTD.
                                   v.
           COMMNR. OF· CENTRAL EXCISE, GUNTUR
             . (Civil Appeal Nos.5842-5843 of 2004)
                            JULY 7, 2008
B
      [DR. ARIJIT PASAYAT, P._ SATFIASIVAM AND AFTAB
                        ALAM, JJ.]

         .Central Excise Act, 1944:
C       s. 3 - Exemption claimed for finished product manufac-
   tured by an Export Oriented Unit wholly from raw materials
   produced in India and cfeared to pomestic Tariff Area - Dis-
   pute regarding some items used for man(Jfacture of finished
   pmduct whether raw materials or consumables -'" Held:
D ·CESTAT has not considered the materials on record in proper
   perspective - Matter remitted to it for decision afresh - Notifi-
   cation No.8197-CE dated 1.3.1997.
         . The appellant, as an Ex"port Oriented Unit; claimed
. E exemption- under Notification No.8/97~CE dated 1.3.1997            I

    for Hydrogen Peroxide manufactured and cleared by it .to
    tire Domestic Tariff Area. The adjudicating authority de-
    clined the benefit as it did not accept the case of the as-
    sessee that the finished goods were man_ufactured wholly
    from ra"'!.materia!s produced in India. The Commissioner
 F (Appea.ls) accepted the claim of the assessee that the ·
    items used in manufactui::ing_ the finished products were
    not raw materials but o·n1y consumabl.es. However, the
    CESTAT allowed the appeals filed by the revenue. Ag".'
    grie..ved, the asse$see filed the instant appeals.
·G'           . . . ,..;  .                    c



           Disposing of the appeals, the Court
         HELD: Since the CESTAT has nofconsidered-the
     materials on record in the proper perspective, the im-

·H                                132
       M/S. ASIAN PEROXIDES LTD. v. COMMNR. OF _ 1-33
     CENTRAL EXCISE, GUNTUR [DR. ARIJIT PASAYAT, J.]

pugned judgments are set aside. The matter is. remitted            A
to the CESTAT in each case to deal with it afresh in accor-
dance with law. The CESTAT while doing so shaJI keep in
view the decision of this Court in the case of V.anasfhali
Textiles Industries Ltd.* [Para 8] [136-F & G]
      *Vanasthali Textiles Industries Ltd. v. Commr. Of C. Ex.,    B
Jaipur, Rajasthan 2007 (218) ELT. 3(SC); relied on.
     CCE v. Ballarpur Industries Ltd. (1989) 4 SCC 566 and
Commissioner of Central Excise & Customs, Indore v. Cen-
tury Denim (2001) 129 ELT 657(T) referred to.              ·       c
    CIVIL APPELLATE JURISDICTION : Civil Appeal Nos.·. ·
5842-5843 of 2064
     From the final Order. No. 422 and 423/2004 dated .4/ZI
2004 of the Customs, Excise & Service Tax Appellate Tribunal,
                                                                   0
South Zonal Bench, Bangalore, CircOit Bench at Hyderabad in
Appeal No. E/181-182/2001
                                WITH
     C.A. No. 3644-3645 of 2005
                                                                    E
      Alok Yadav, Rajesh Kumar and M. P. Devnath for the Ap-
pellant.
     I. Venkatanarayana, Navin Prakash, Rahul Kaushik and
                                                                    ·l
B.. Krishna Prasad for the Respondent.              ·    ·
                                                                    F
     The Ju_~gment of the Court was delivered by·
     Dr. ARIJIT PAS~YAT, J. 1. In these appeals challenge is to
the order by the Customs Excise and Service Tax Appellate Tri-
bunal, South Zonal Bench, Bangalore (in short the '1CESTAT').
Before the CESTAT the issue related to the eligibility of the ap- G
pellantfor the benefit of exemption under Notification No.8/97-
CE dated -1.3.1997 for Hydrogen Peroxide manufactured and
cleared by the appellant to the Domestic Tariff Area ( in short the
'OTA'). -The Notification .in question .exempts finished products-   ,,
manufactured in a 100%_ Export Oriented Unit (in short_ the 'EOU') ,H
        134        SUPREME -COURT REPORTS                 [2008] 10 S.C.R.
                            .
                            ~·
                                                                                ..
   A    wholly from the raw materials produced or manufactured in India - ~
        and allowed to be sold in India from so much of the duty of excise
        leviable thereon under Section 3 of the Central Excise Act, 1944
        (in short the 'Act') as is in excess of amount equal to the duty of
      . excise leviable under Section 3 of the Act on like goods pro-
   B . duced or manufactured in India other than in a 100% EOU.
              2. The original authority did not accept the stand of the
       _appellant that the finished goods namely Hydrogen Peroxide
       . removed .by them from their EOU to the OTA was manufactured
         wholly from the raw materials produced in India.                      ,.
   c       3. Aggrieved by the adjudication, assessee appellant filed
     an appea! before the Commissioner of (Appeals) Excise who
     accepted the contention of the appellant that the above men-
     tioned items are not raw materials but only consumable and,
     therefore, assessee cannot be denied the benefit of exemption
  -D under Notification no.8/97 in respect of several raw materials
     (11 in number). The revenue preferred appeals before the
     CESTAT. - By the impugned order in each case CESTAT ac-
     cepted the s!and of the revenue. It was held that the respondent
     was not entitled to the benefit of Notificati911No, 8/97.
   E            4. It heJd that in Commissioner of Central Excise & Cus-
         toms, Indore v. Century Denim (2001) 129 ELT 657 (T) the Tri-
         bunal applied the tests enunciated by this Court namely, whether
         it is an ingredient which goes into the making of the end product
         in the sense that without_ its presence the end product, as such is
- · F -· renderea impossible and took the view that indigo _pure dye,·-lycra
       ·and other important fixing agents utilized in__ the manufacture of
         denim fabrics are_ raw materials and not consumables.
          µ   _s. A~cording' to the learned c;ounselfor the appellant the
         materials in question are not raw materials b~t consumable as
  G      per definition in para 3.13 of the EXIM Policy. According to the
         definition of 'consumable' it means anYitem which participates


                                                                               --
        'in or is required for manufacturing process but does noHorm
         part of the end"product. items which are substantially or totally
      - consumed during manufacturing _process will be deemed to be
 · 'H -consqmable:. According to para 3.41 of the policy, raw n:aterial

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