RELIANCE INDS. LTD Vs. COMMISSIONER OF CUSTOMS

JUDGEMENT

(1.) APPELLANT applied for advance licence under the DEEC scheme for import of various goods required for manufacture of polyester staple fibre and partially oriented yarn. In pursuance of this licence, it imported consignment of Dowtherm (heat transfer fluid) and tri ethylene glycol (TEG) and sought clearance of these goods free of duty in terms of Notification No. 116/88 and the succeeding Notification No. 159/90 with effect from 30 -3 -1990. The Custom House issued notice proposing to deny exemption to these goods. The ground on which the denial with regard to Dowtherm based was that it was heat transfer medium which is superheated and distributed to vessels and pipe lines containing polymer and oligemer and therefore, never comes into contact with the polymers or any process materials and is not consumed the material but used repeatedly and, therefore, it is not used in the manufacture of the resultant product. It was alleged with regard to TEG that it is only used to clean the parts of the manufacturing machinery such as spinnerettes, spin packs, gear pumps and not participated in the manufacturing process and hence not consumed in the resultant product. In the impugned order, the Commissioner has found these allegations to be correct and concluded that the benefit of notifications to be denied. Hence, this appeal.

(2.) ADVOCATE for the appellant contends that the matter has been decided in the appellant's favour by the Supreme Court in Oblum Electrical Industries v. CC, Bombay 1997 (94) E.L.T. 449 (S.C.). He says that the Court has drawn a distinction between the words "materials required to be imported for the purpose of manufacture of products" and the words "replenishment of materials used in the manufacture of the resultant products figuring in Notification No. 116/88 and held that the definition of the word "materials" occurring in Clause (viii) of the explanation to the notification must be confined in its application to the word "materials" occurring in the expression "replenishment of materials used in the manufacture of the resultant products" in the notification. The goods imported by the appellant, he says, were not replenishment materials but were used for the purpose of manufacture of the resultant product and had actually been so used. He relies upon the certificate of Silk and Artsilk Mills Research Association (SASMIRA) to say that each of the products in question is essential for the manufacture of the resultant product; the product cannot be manufactured unless each of them is used.

(3.) DEPARTMENTAL representative says that the Court has not drawn a distinction, except as regards tense between "materials required to be imposed for the purpose of manufacture of products" and "replenishment of materials used in the manufacture of the resultant product". The expression "required to be imported for the purpose of manufacture of products" occurring in the first notification has necessarily to be differently worded from the expression "replenishment of materials used in the manufacture of the resultant products" because each of these relates to materials used in different circumstances. The first relates to goods which will themselves be used by the importer or supporting manufacturer in order to achieve the production of the goods to be imported. The second is for replenishment of materials which have already been put to use. Therefore, he says, it is not correct to say that the two expressions, except with regard to the fact of intended use, covered different kinds of categories of goods. He finds support in the Supreme Court judgments in (Collector of (Central Excise v. tastena raper industries 1989 (43) E.L.T. zui (S.C.) and in Deputy Commissioner of Sales Tax and Ors. v. Thomas Stephen and Co. Ltd. 1988 (34) E.L.T. 412 (S.C.). He cites the decision of the Tribunal in Ester Industries Ltd. v. CCE, Meerut 1997 (90) E.L.T. 391 to say that TEG has been held to be not input under Rule 57A of the Central Excise Rules, 1944, not being an input used in or in relation to the manufacture of the final product and also the decision of the Tribunal in Shri Ramakrishna Steel Industries Ltd. v. CCE, Madras 1996 (82) E.L.T. 575 in support of the preposition that only goods which are used in the physical or chemical process of manufacture must be considered to be raw material or component. He further contends that the Supreme Court judgment relied upon by the appellant had no occasion to consider whether the goods had complied with the requirement of condition (d) that "the goods shall be utilised for the manufacture of the resultant products". He says that it is clear from the fact that the goods which were considered by the Supreme Court actually had participated in the manufacture of the resultant products.