1985 (1) TMI 335 - AT - Central Excise

Summary

Issues:
1. Interpretation of Rule 56A of the Central Excise Rules, 1944 regarding availing proforma credit on carbon paste and refractory materials used in the manufacture of ferro alloys.
2. Consideration of carbon paste and refractory bricks as raw materials in the manufacture of ferro alloys.
3. Application of previous tribunal decisions on similar cases to the current appeal.

Analysis:
1. The appeal before the Appellate Tribunal CEGAT MADRAS involved a dispute regarding the applicability of Rule 56A of the Central Excise Rules, 1944 on the availing of proforma credit for carbon paste and refractory materials used in the production of ferro alloys. The Appellate Collector had rejected the claim for proforma credit, stating that these materials were not considered raw materials or components but only input materials in the manufacturing process of ferro alloys falling under Item 68-CET.

2. The advocate for the appellants argued that carbon paste and refractory bricks should be treated as raw materials based on their essential role in the manufacturing process. Refractory bricks, including fire bricks, high alumina bricks, magnesite bricks, and chrome magnesite bricks, are used to line furnaces and ladles, selected for their chemical composition and physical properties to withstand high temperatures and prevent contamination of end-products. Similarly, carbon paste, used in the production of baked electrodes, plays a crucial role in the reduction of oxides during the manufacturing process of ferro alloys.

3. The Tribunal considered the arguments presented by both sides regarding the nature and function of carbon paste and refractory bricks in the manufacturing process of ferro alloys. After a detailed analysis, the Tribunal concluded that the carbon paste, referred to as a mixture fed into cylindrical tubes for backing electrodes, primarily served as a means of conducting electricity and did not contribute significantly to the reduction process of ferro alloys. Additionally, the refractory bricks, although essential for withstanding high temperatures in the production process, were not deemed as raw materials that directly participated in the essential reactions leading to the creation of ferro alloys.

4. The Tribunal distinguished the current case from a previous decision involving carbon paste as a raw material for pig iron and ferro silicon production, emphasizing the specific context and usage of carbon paste in the present appeal. Ultimately, the Tribunal dismissed the appeal, ruling that the carbon paste and refractory bricks did not qualify as raw materials in the manufacture of ferro alloys based on their respective functions and contributions to the production process.