Java does not use PATH for any purpose. The operating system uses it to find programs; the OS will use PATH to find java.exe, for example.
Javawill use a CLASSPATH environment variable to find class and jar files but it's generally a bad practice to use it. If necessary, you can use the "-cp" switch to javac.exe or java.exe to specify where these programs should look for classes; this makes it much easier for each program to look for classes in the place most appropriate for it. But note that with no CLASSPATH and no -cp switch, these programs will both look in the current directory for classes, which, when you're just starting out, is almost certainly what you want.
I'm moving this to the "Java in General (Beginner)" forum, where it's on topic.