COCHIN SHIPYARD LIMITED Vs. COMMISSIONER OF CUSTOMS

JUDGEMENT

(1.) This appeal arises from Order -in -Appeal No. 94/1999, dated 17 -8 -1999 by which the Commissioner has denied the benefit of Customs Notification No. 11/97 -Cus., dated 1 -3 -1997 in respect of the imported item 'Photoner'. The Notification 11/97 -Cus., dated 1 -3 -1997 is a composite and a detailed Notification Sl. No. 195 grants benefits to items falling under any Chapter with description as follows :

(2.) The appellant contends that the item is a raw material in the nature of fine grade powder having Electro Conductive property. It is stated that this powder is sprinkled on the steel plate to be cut according to the sizes for fabrication based on drawings for shops. It is further stated that the process of developing and fixing the marking is by a photographic development process. It is stated that when EPM machines makes the cutting lines on the structural plate, the imported item photoner reacts and sticks in plate in the dark area of lines projected on steel plates and the un -reacted photoner on the other unmarked areas of steel plates is recovered and re -cycled for future use. It is stated further that when the powder is reacted with the help of EPM machines, the cutting lines are clearly visible which would enable the appellant to cut the plate for using in the production lines without any minutest dimensional mistake. It is stated that the item is an essential raw material and without it, the precious cutting is not possible. It is stated that the item was granted the benefit earlier to the date of import and even now it is being extended.

(3.) Arguing for the appellant, the learned Counsel pointed out that the Commissioner, in the impugned order, has clearly recorded that the photoner is essentially used as a 'Process aid' and that it is used to assist the process of cutting sheets by forming a design over the surface of the sheet. He has noted that if this technology were not available, the other alternative would have been to mark the sheets or prepare tin plates. He has noted that it cannot be considered as a raw material or part. He has also rejected the plea of the benefit having been extended in the past. The learned Counsel submits that the finding recorded is not correct. So long as the item is used in the manufacture as a raw material and for use in the manufacture of goods falling under the respective headings as in Sl. No. 195 of the Notification, then the benefit is required to be extended. It is his contention that the item is being used as a raw material only in the manufacture of goods. He submits that the definition of the word 'raw material' has not been given in the notification and therefore, the term has to be understood in the way in which it is understood in the trade. He pointed out that the Apex Court, in the case of CCE v. Eastend Paper Industries Limited reported in 1989 (43) E.L.T. 201 (S.C.) held that the wrapping paper used in wrapping of paper is to be treated as a raw material and that the wrapping paper is not consumed. He submits that the Tribunal, in the case of CCE v. Hindustan Aluminium Corporation reported in 1987 (28) E.L.T. 529 (Tribunal) has held that raw material is not necessarily required to be constituent of final product. He submits that this judgment has been upheld by the Apex Court, as noted in 1996 (88) E.L.T. A192. He also relied on the judgment rendered by the Tribunal in the case of CCE v. Bharat Aluminium Corporation reported in 1987 (29) E.L.T. 569 (Tribunal) which explained the meaning of the term 'raw material' and thereafter proceeded to hold that the chemicals which are noted in the judgments were entitled to set off duty as they are required to be treated as raw materials despite the fact that certain amount of chemicals would be lying at the end of the manufacture process.