2001 (4) TMI 160 - AT - Central Excise

Summary

Issues involved:
Claim of benefit under Notification No. 217/86-C.E. and Notification 21/86-C.E. for iron and steel products manufacturing - Interpretation of use of mortar in relation to the final product manufacturing.

Analysis:
The appeals before the Appellate Tribunal CEGAT, Court No. III, New Delhi involved a common issue regarding the claim of benefits under Notification No. 217/86-C.E. and Notification 21/86-C.E. for the manufacturing of iron and steel products. The appellants, engaged in the production of iron and steel products, claimed the benefit of these notifications in relation to mortars used in their manufacturing process. The adjudicating authority denied the benefit of Notification No. 217/86-C.E. stating that the mortar was not used in or in relation to the manufacture of the final product.

During the proceedings, the appellants referred to previous decisions by the Tribunal and the Hon'ble Karnataka High Court to support their claim. They argued that mortar was indeed used in relation to the production of the final product, citing cases where similar materials were deemed eligible inputs under relevant rules and notifications. The Hon'ble Karnataka High Court, in a previous case, had held that certain materials, like ramming mass used for lining induction furnaces, qualified as eligible inputs under Rule 57A of the Rules.

The Tribunal considered the nature and use of mortars, noting that they are refractory materials used in arc furnaces for joining fire bricks and requiring frequent replacement. Referring to the decision of the Hon'ble Karnataka High Court in the case of Escorts Ltd., the Tribunal emphasized the broader interpretation of the term "in relation to the manufacture" concerning the eligibility of input goods for benefits like Modvat credit. The Tribunal also cited a previous case where mortar captively consumed in lining furnaces was deemed entitled to the benefit of Notification No. 217/86-C.E.

Ultimately, based on the precedents and interpretations presented, the Tribunal ruled in favor of the appellants, holding that they were entitled to the benefit of Notification 217/86-C.E. concerning the use of mortar in the manufacture of iron and steel products. The appeals were disposed of accordingly, affirming the eligibility of mortars as input materials in the manufacturing process.