COLLECTOR OF CENTRAL EXCISE, NEW DELHI. versus BALLARPUR INDUSTRIES LTD.

Citation: [1989] SUPP. 1 S.C.R. 323 · Decided: 29-09-1989 · Supreme Court of India · Bench: M.N. VENKATACHALIAH · Disposal: Dismissed

Judgment (excerpt)

COLLECTOR OF CENTRAL EXCISE, NEW DELHI. 
v. 
BALLARPUR INDUSTRIES LTD .. 
SEPTEMBER 29, 1989 
[M.N. VENKATACHALIAH, N.D. OJHA AND 
J.S. VERMA, JJ.] 
Central Excises & Salt Act, 1944/ Central Excise Rules, 1944: Sec-
tions 2(f), J and item 68 in First Schedule-Notification No. ·105/82-CE 
dated 28.2.1982/Rule 8-Manufacture of paper/paper-boards-Use of 
Sodium Sulphate in the process-Whether used as raw material-Enti-
tlement to proforma credits of duty paid. 
Words & Phrases: "Raw Material"-Meaning of. 
· Respondent has been using Sodium Sulphate in the process of 
manufacture of paper and paper-boards, and by virtue of Notification 
No. 
105/82-CE dated 28.2.1982 claimed proforma-credits. The 
Superintendent of Central Excise declined tbe claim on the ground that 
Sodium Sulphate was burnt up in the process of manufacture and was 
not retained in the paper, and therefore, could not be considered as raw 
material in the manufacture of paper. He also issued a show cause 
notice for the recovery of proforma-credits already availed of by the 
respondent. On appeal, however, the Assistant Collector set aside the 
show cause notice holding that Sodium Sulphate was an essential raw 
material in the manufacture of paper and as such attracted the benefit 
of the notification. But, the Collector of Central Excise (Appeals) set 
aside the order of the Assistant Collector and remitted it back to him for 
readjudication. Respondent challenged this order before the Customs, 
Excise and Gold (Control) Appellate Tribunal. Adopting the reasoning 
in its earlier decision in Seshasayee Paper and Boards Ltd. v. Collector 
of Central Excise, (1985] 22 ELT 163, the Tribunal allowed the appeal 
and restored the order of the Assistant Collector. 
This appeal under Section 35-L(b) of the Central Excises and Salt 
Act, 1944 is against the Tribunal's order. 
On behalf of the Appellant, it was contended that the word "raw 
material" connotes something more than what is 'used' in the 
manufacture and requires that goods to become "raw material" must 
either in their original or altered form, endure as a composite element 
of the end product. 
323 
A 
B 
c 
D 
E 
F 
G 
H 
324 
SUPREME COURT REPORTS 
[1989] Supp. l S.C.R. 
A 
The Respondent contended that Sodium Sulphate was an essential 
chemical ingredient in the chemistry of paper technology and the fact 
that the ingredient was actually burnt up or sublimated in the process; 
and did not retain its identity in the end product, will not detract from 
its being a raw material. 
B 
Dismissing the appeal, 
c 
HELD: I. I. The Tribunal was right in its conclusion that So-
dium Sulphate was used in the manufacture of paper as "Raw-
Material" .within the meaning of the Notification No. 105/82/CE dated 
28.2.1982. [333A] 
1.2. The expression "Raw-Material" is not a defined term. The 
meaning to he given to it is the ordinary and well-accepted connotation 
in the common parlance of those who deal with the matter. The ingre-
dients used in the chemical technology of manufacture of any end-
product might comprise, amongst others, of those which may retain 
D their dominant individual identity and character throughout the pro-
cess and also in the end-product; those which, as a result of interaction 
with other chemicals or ingredients, might themselves undergo chemi-
cal or qualitative changes and in such altered form find themselves in 
the end-product; those which, like catalytic agents, while influencing 
and accelerating the chemical reaction, however, may themselves 
E remain uninfluenced and unaltered and remain independent of and 
outside the end-products and those, as here, which might be burnt-up 
or consumed in the chemical reactions. It could be that the ingredient 
should be so essential for the chemical processes culminating in the 
emergence of the desired end-product, that having regard to its impor-
F 
tance in the indispensability for the process, it could he said that its very 
consumption on burning-up is its quality and value as raw-material. In 
such a case, the relevant test is not its absence in the end-product, but 
the dependance of the end-product for its essential presence at the 
delivery end of the process. The ingredient goes into the making of the 
end-product in the sense that without its absence, the presence of the 
end-product, as such, is rendered impossible. This quality should 
G coalesce with the requirement that its utilisation is in the manufacturing 
process as di

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