1988 (2) TMI 210 - AT - Central Excise

Summary

Issues:
The appeal involves the interpretation of Notification No. 201/79-C.E. dated 4-6-1979 under Rule 8(1) of the Central Excises and Salt Act, 1944, regarding the eligibility of set-off for duty paid on Titanium Substrate Insoluble Anodes used in the manufacture of Caustic Soda.

Summary:
The appeal by the Revenue challenges the order of the Collector of Central Excise (Appeals), New Delhi, regarding the eligibility of the respondents to avail of the credit of duty paid on Titanium Substrate Insoluble Anodes under Notification No. 201/79. The Revenue contends that the Anodes are not entitled to set-off as they are not directly used in the manufacture of Caustic Soda, but are part of the Electrolytic cells. The respondents argue that the Anodes play a vital role in the manufacturing process and should be considered as inputs for the benefit of the set-off.

The Tribunal notes that previous decisions have held that items need not be raw materials directly going into the end product to be eligible for set-off. The term "inputs" in the notification is interpreted broadly to include goods used in the manufacture of other excisable goods. Various cases have established that goods consumed in the manufacturing process, even if not raw materials, are eligible for set-off under Notification No. 201/79.

The Tribunal further observes that the electrodes in question participate directly in the manufacturing process of Caustic Soda, even though they do not act as raw materials. The electrodes are consumed in the reaction leading to the production of Caustic Soda, establishing their nexus with the production process. Citing previous decisions and Supreme Court interpretations, the Tribunal upholds the Collector (Appeals)' decision to allow the respondents' appeal for the benefit of Notification 201/79, rejecting the Revenue's appeal.