2003 (11) TMI 454 - AT - Central Excise

Summary

Issues: Denial of credit on urea used in the plant for Nitroxide absorption and its neutralization for pollution control.

In this case, the issue revolved around the denial of credit on urea used in the plant for Nitroxide absorption and its neutralization for pollution control. The appellant contended that the use of urea was directly related to the manufacture of the final product, Oxalic acid, while the authorities argued that the primary use was in the treatment of effluents, thereby rendering it ineligible for credit.

The appellate tribunal analyzed the plant's schematic diagram and found that there was no separate effluent treatment plant, contrary to the Commissioner of Central Excise (Appeals)'s findings. The tribunal observed that the absorption column's function was crucial for pollution control by absorbing unwanted gases, particularly Nitric Oxide. Without this process, the commercial feasibility of producing Oxalic acid would be compromised.

The lower authorities were criticized for failing to examine the technical aspects or provide necessary technical opinions to support their contention that the use of urea was primarily for effluent treatment. The tribunal emphasized that since the use of urea was essential in the commercial manufacture of Oxalic Acid and also contributed to pollution treatment, denying credit was unjustified.

Ultimately, the tribunal held that the credit on urea was indeed eligible as it was crucial for the commercial manufacture of Oxalic Acid and pollution control. The tribunal set aside the previous order and allowed the appeal in favor of the appellant, emphasizing the importance of considering the technical aspects and essentiality of the processes involved in determining credit eligibility.