JUDGMENT

VENIKATACHALIAH, J.:- This appeal, under Section 35-L (b) of the Central Excise and Salt Act, 1944, arises out of and is directed against the Order No. E/1351/88-C dated 2-12-1988, by the Customs, Excise and Gold (Control) Appellate Tribunal, (Tribunal) New Delhi, allowing the appeal preferred by the Respondent and holding that Respondent was entitled to certain proforma credits of the duty paid on "Sodium Sulphate" used in the manufacture of paper and paper-boards in which respondent is engaged.

The short point for consideration in this appeal is whether the Respondent-Manufacturer,-The Ballarpur Industries Ltd., -was entitled to the benefit of Central Governments Notification No. 105/82-CE, dated 28-2-1982 a question which in turn, depends on whether Sodium Sulphate could be said to have been used as "Raw-Material" in the manufacture of paper and paper-board. In the proceedings before the authorities, the dispute initially concerned, six other inputs. But the controversy before us was limited, as it should rightly be, only to Sodium Sulphate inasmuch as even in the appeal before the Collector (Appeals), the departments grievance, apparently, was confined to the Pro forma-Credits of duty earlier paid on Sodium Sulphate (See Col. 6 of the Assistant Collectors Memorandum Appeal dated 15-7-1987 before the Collector (Appeals)).

2. Respondent is a manufacturer of paper and paper-boards in the processes relating to which "Sodium Sulphate" is used "in the chemical recovery cycle of Sodium Sulphide which forms an essential constituent of Sulphate cooking liquor used in the digestion operation". The notification dated 28-2-1982 under which the credit is claimed reads:

"In exercise of the power conferred by sub-rule (1) of rule 8 of the Central Excise Rules, 1944, and in supersession of the Notification of the Government of India in the Ministry of Finance (Department of Revenue) No. 178/ 77-Central Excise, dated 18 June, 1977, the Central Government hereby exempts all excisable goods (hereinafter referred as "the said goods") on which the duty of excise is leviable and in the manufacture of which any goods failing under Item No. 68 of the First Schedule to the Central Excise and Salt Act. 1944 (1 of 1944) (hereinafter referred as the input,") have been used as raw material or component parts (hereinafter referred to as "the inputs") from so much of the duty of excise leviable thereon as is equivalent to the duty of excise already paid on the "inputs

(Emphasis supplied)

The Superintendent of Central Excise, Range-2, Yamunanagar, declined the Pro forma Credit to the duty paid on "Sodium Sulphate" on the ground that Sodium Sulphate "was burnt-up in the process of manufacture and was not retained in the paper" and that. therefore, it could not be considered "Raw-Material" in the manufacture of paper. Accordingly, he caused a notice dated 18-1-1983 to be issued requiring respondent to show cause why the amounts of Pro forma Credit availed of by the respondent for the period between 28-2-1982 and 31-10-1982 should not be recovered. The reason why "Sodium Sulphate" could not be held to be a "raw material" in the manufacture of paper was set out in the notice thus :

"..........The Pro forma Credit claimed and granted in respect of the above mentioned items from 28-2-82 to 31-10-82 is not admissible because these Chemicals are burnt out and do not remain in the finished product. The amount of pro forma credit availed is, therefore, liable to be recovered ..........."

(Emphasis supplied)

However, the Assistant Collector of Central Excise, Ambala, by his order dated 27-6-1986 took a different view and held that Sodium Sulphate, even as the other inputs referred to in the said notice, was an essential raw material in the manufacture of paper and attracted the benefit of the notification. The show cause notice dated 18-1-1983 was, accordingly, set aside.

But, the Collector of Central Excise (Appeals) set aside the order of the Assistant Collector