2002 (2) TMI 1146 - AT - Central Excise

Summary

Issues:
1. Whether Macscal/Macperz are considered as inputs eligible for credit.
2. Comparison of the present case with the decision in M/s. Synthetics & Chemicals Ltd.

Analysis:
1. The primary issue in this case revolves around the eligibility of Macscal/Macperz as inputs for which credit can be taken. The Appellant contended that these items are crucial water treatment chemicals used to treat cooling water, preventing damage to equipment like heat exchangers, ensuring proper functioning, and increasing equipment lifespan. They argued that failure to use these chemicals could lead to corrosion, malfunctions, deviation of plant parameters, contamination of products, and production of sub-standard goods. Citing relevant case laws, they sought credit for these items. The Commissioner (Appeals) agreed with the Appellant's contentions, emphasizing the wider scope of the term 'inputs' under Rule 57A, which includes items used directly or indirectly in or in relation to the manufacture of final products. The Commissioner (Appeals) noted that the chemicals are essential for protecting machinery, increasing durability, and ensuring smooth plant operation, thus making them eligible for input credit. The Appellant's arguments were supported by previous case laws, leading to the decision to set aside the lower authority's order and allow the appeal.

2. The second issue involves a comparison with the decision in M/s. Synthetics & Chemicals Ltd., where certain items were denied Modvat credits as inputs. The Revenue argued that Macscal/Macperz should not be considered inputs as they only prevent corrosion and do not directly contribute to steam generation or temperature maintenance, citing the decision in M/s. Synthetics & Chemicals Ltd. In contrast, the Commissioner (Appeals) found that the items in the present case play a crucial role in the smooth operation of the plant, distinguishing it from the case referred by the Revenue. The Commissioner (Appeals) highlighted four Tribunal decisions supporting the eligibility of similar items for credit, ultimately rejecting the Revenue's appeal based on the proper and legal order issued.

In conclusion, the judgment by the Appellate Tribunal CEGAT, Chennai upheld the eligibility of Macscal/Macperz as inputs for which credit can be taken, emphasizing their vital role in protecting equipment and ensuring plant efficiency. The decision also differentiated the present case from the precedent cited by the Revenue, ultimately rejecting the appeal and affirming the Commissioner (Appeals) order.