Judgment :- 1. This appeal by the revenue is filed challenging the order passed by the Central Excise and Service Tax Appellate Tribunal, South Zonal Bench, FKCCI, K.G. Road, Bangalore dated 5th July 2005 in Final Order No.1094/2005 wherein the order passed by the Commissioner of Central Excise, Belgaum, in Order No.9/2004 dated 12-07-2004 was set aside. 2) The facts leading to this appeal are as follows: The respondent herein is a 100% Export Oriented Unit engaged in the manufacture of combed grey cotton yarn of various counts falling under Chapter Heading 5205 of Schedule to Central Excise Act. The cotton yarn manufacture by the respondent herein is cleared for export as well as for sale in India also referred to as Domestic Tariff Area which is effected on the basis of permission given by the Assistant Development Commissioner, Kochin Export Sub-Office, Bangalore, from time to time. The said DTA clearance is secured by the respondent availing benefit of notification No.8/97-CH dated 01-03-1997 and duty is paid in terms of the said notification. It is the case of the revenue that the assessee has wrongly availed the benefit of the said notification by suppressing the fact that the respondent is using imported raw material in the manufacturing of cotton yarn cleared to DTA. 3) It is the case of the respondent that they are importing wax from Germany which is used in the process of manufacturing of cotton yarn. The said wax is being used by them as consumable in the process of manufacture of cotton yarn, which according to the respondent is not raw material in the process of manufacturing the cotton yarn, based on that they have availed the benefit under the aforesaid notification. According to the appellant herein, the said wax which is imported by the respondent company is not a consumable, it is a raw material without which the cotton yarn cannot be manufactured by the respondent. 4) It is the case of the appellant that Director General of Central Excise Intelligence, Bangalore on investigation found that the Wax used by the respondent in the process of manufacturing of cotton yarn, is a raw material. Accordingly a show cause notice was issued to respondent on 22.02.2002 for which a reply was submitted by them. 4) It is the case of the appellant that Director General of Central Excise Intelligence, Bangalore on investigation found that the Wax used by the respondent in the process of manufacturing of cotton yarn, is a raw material. Accordingly a show cause notice was issued to respondent on 22.02.2002 for which a reply was submitted by them. Thereafter the adjudication authority by its order dated 27.8.2002 held that respondent is not eligible to claim benefit of Notification No.8/97 dated 01.03.1997 on the ground that the wax used by them in the process of manufacturing is a raw material which was challenged by the respondent herein in an appeal before the CESTAT in appeal No. 1068/2003 wherein the order of the adjudication authority was set aside and the matter was remanded for fresh enquiry by its order dated 13.08.2003. In the said proceeding it was held by the Adjudicating Authority that the Wax used in the manufacturing of cotton yarn is not a consumable and is a raw material and that if one of the raw materials used in the manufacturing process is not produced and manufactured in India, the benefit of exemption under Notification No.8/97 would not be available to the assessee. In the instant case the wax which is used in the process of manufacturing the cotton yarn being imported from Germany, the respondent is not entitled to the benefit of Notification No.8/1997 dated 01.03.1997 and accordingly denied the benefit of said Notification to the respondent herein by its order dated 12.07.2004 which was challenged by the respondent herein before the CESTAT in Proceedings No.1094/2005 which came to be allowed by the order dated 05.07.2005 against which the Department has come up in this appeal. 5) The appeal was admitted on 13.11.2006 faming the following substantial questions of law for consideration. 1. Whether the Tribunal was correct in holding that wax used in the manufacture of yarn is to be considered as consumable and not as raw material? 2. Whether the Tribunal was correct in not placing the reliance on the decision of the Hon’ble Supreme Court in 1989 (43) ELT 804 (SC)? 3. Whether Tribunal was correct in interpreting the opinion/views of the experts in peacemeal? 4. 2. Whether the Tribunal was correct in not placing the reliance on the decision of the Hon’ble Supreme Court in 1989 (43) ELT 804 (SC)? 3. Whether Tribunal was correct in interpreting the opinion/views of the experts in peacemeal? 4. Whether the Tribunal was correct in holding that circular Nos.389/22/98-CX dated 05.05.1998 and circular no.631/22/02-CX dated 28.03.2002 would qualify the assessee to claim the benefit of exemption as contemplated in Notification 8/97-CX dated 01.03.1997? 5. Whether Tribunal was correct in holding that the show cause notice and the claim of the Department was time barred and Department was not correct in invoking the extended period of limitation as per Section 11A? 6) After hearing the learned counsel appearing for appellant and respondent and on perusal of the order of Adjudicating Authority as well as the Tribunal this Court answers the aforesaid substantial questions of law in the affirmative for the following reasons. 7) Since all the five substantial questions of law are inter connected, they are discussed together. 8) In the instant case the basic produce which is manufactured by the respondent is cotton yarn. The wax rolls which are imported by the appellant herein is utilized for manufacturing of yarns to maintain co-efficiency of friction in a particular range to avoid excessive yarn break as well as needle break, i.e., use of wax is basically to maintain the co-efficiency of friction between the yarn and metal. The wax will not become part of the end product. Before deciding whether the wax is a raw material or consumable. The definition of raw material and consumable as per EXIM Policy 1997-2000 amended upto 07.04.1999 is required to be looked into which is as under: Consumables: means any item which participates in or is required for a manufacturing process, but does not form a part of the end product. Items which are substantially or totally consumed during a manufacturing process will be deemed to be consumables. Raw materials: means .(i) basic materials which are needed for the manufacture of goods, but which are still in a raw, natural, unrefined or unmanufactured state; and .(ii) for a manufacturer, any materials or goods which are required for his manufacturing process, whether they have actually been previously manufactured or are processed or are still in a raw or natural state. 9) The aforesaid definition of raw material, if looked into in the light of reported decision of the Hon’ble Supreme Court in the case of Collector of Central Excise Vs. M/s Ballarpur Industries Ltd., (1989 {43} E.L.T. 804 (S.C) wherein the scope of the expression of raw material is discussed as under: “…… The question in the present case is whether the ingredients of the last mentioned class qualify themselves as and are eligible to be called raw material for the end product. One of the valid tests in our opinion 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 importance in and indispensability for the process it could be said that its very consumption or burning up is its presence in the end product, but the dependence 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 is absence the presence of the end product, as such, is rendered impossible. This quality should coalesee with the requirement that its utilization is in the manufacturing process as distinct from the manufacturing apparatus…” 10) Reading of the definitions `consumables’ and `raw materials’ in the light of discussion made by the Hon’ble Supreme Court in the aforesaid decision clearly discloses that the ratio of the said judgment does not apply to the case on hand for the reason that the wax which is used by the respondent in manufacturing of cotton yarn does not become part of the end product or that any of the ingredients as observed in the aforesaid judgment either essential for chemical process culminating in its emerging process or burns itself or utilizes itself or end in itself to merge with the final product, i.e., cotton yarn. The one and only purpose for which the said wax is used by the respondent herein is to reduce the friction between the metal and the yarn in the process of its manufacturing, the absence of it does not render manufacturing process impossible. On the contrary it would only smoothen the process of manufacturing. Therefore use of the wax could not be considered as a raw material in the process. On the contrary it would only smoothen the process of manufacturing. Therefore use of the wax could not be considered as a raw material in the process. At best it can be considered as a material used for the smooth process of manufacturing the cotton yarn. Therefore the ratio of the said judgment would not apply to the case on hand. In fact The South India Textile Research Association by its letter No.VIII/3/953/2001 dated 17.01.2007 and the Bombay Textile Research Association in its letter MPD (SPG)/341/02 Dated 23.09.2002 which are produced at Annexure G and H in this appeal also clearly supports the aforesaid view. In the result this Court is of the opinion that the finding of the CESTAT in Final Order No.1094/05 holding that the said wax is a consumable and not a raw material is correct. Therefore the respondent availing the benefit of Notification No. 8/97 C.E. dated 01.03.1997 is in order. Accordingly the appeal filed by the Revenue is dismissed answering the aforesaid substantial questions of law in favour of the respondent herein.