Snowball is used as a scapegoat because he is wrongly blamed for everything that goes wrong or might go wrong on the farm. In chapter 6, for example, the windmill that the animals spend so long building is destroyed by a storm. Napoleon doesn't want to acknowledge that the storm is responsible for the destruction of the windmill or that he didn't direct the animals to build the walls of the windmill thick enough, and so he tells the animals that "Snowball has done this thing!"
Napoleon scapegoats Snowball here because he knows that it is to his advantage to give the other animals a scapegoat to blame their problems on. If there is a scapegoat that Napoleon can villainize, then it allows Napoleon to better present himself as the hero, savior, and protector. Napoleon also knows that if he acknowledges that the storm has destroyed the windmill, then this will probably demoralize the animals. However, if he blames it on Snowball, he can galvanize the animals around their collective dislike of Snowball and make them build the windmill again.
Later in the story, Napoleon spreads the rumor that Snowball sneaks onto the farm in the middle of the night to sabotage the farm. According to Napoleon, Snowball steals the corn, spills the pails of milk, and smashes the eggs. Indeed, whenever anything goes wrong on the farm, it becomes "usual to attribute it to Snowball." By making Snowball a scapegoat for everything that goes wrong on the farm, Napoleon can deflect blame from himself. He is, after all, the self-declared leader of the farm, and so he really is accountable for anything that goes wrong.
Napoleon succeeds in making the animals believe that Snowball is a constant menace and threat to the farm. Eventually the animals become "thoroughly frightened" of Snowball, and imagine him to be "some kind if invisible influence, pervading the air about them and menacing them with all kinds of dangers." As noted above, this successful scapegoating of Snowball allows Napoleon to set himself up as the protector of the animals, and in doing so, it becomes easier in turn for Napoleon to command the loyalty of the animals.