1990 (4) TMI 145 - AT - Central Excise

Summary

Issues:
- Claim of MODVAT credit for coated Titanium Anodes used in manufacturing caustic soda.
- Interpretation of MODVAT Scheme eligibility based on Tribunal rulings.
- Relevance of Special Bench decisions and Notification 201/79-CE.
- Application of Rule 57A in granting MODVAT credit for inputs used in manufacturing processes.

Analysis:

The case involves an appeal against the rejection of MODVAT credit claim for coated Titanium Anodes utilized in the manufacturing process of caustic soda. The appellant argued that the West Regional Bench of the Tribunal had ruled in favor of Titanium Metal Anodes being eligible for MODVAT credit, citing specific findings supporting their claim. Additionally, reference was made to the Special Bench decision regarding Titanium Substrate Insoluble Anodes and a previous order allowing MODVAT credit for Aluminium sheets used in the electrolysis process.

The Senior D.R. for the Department contended that the Special Bench decision related to Notification 201/79-CE was not applicable as it did not specify excluded items for MODVAT credit. It was argued that unless inputs directly contributed to the end-product formation, MODVAT Scheme benefits were not applicable. The Revenue had filed a Reference Application against the West Regional Bench decision on Titanium Metal Anodes.

In its analysis, the Tribunal noted previous decisions in favor of granting MODVAT credit for inputs used in manufacturing processes, such as Aluminium sheets and Titanium Metal Anodes. Referring to a Supreme Court judgment emphasizing the integral connection of processes to goods production, the Tribunal interpreted the expression "used in or in relation to the manufacture" broadly under Rule 57A. Stressing the wider interpretation of the term "inputs" and citing relevant legal precedents, the Tribunal concluded that the Titanium Anodes were indeed used in relation to the manufacture of specified goods, making them eligible for MODVAT credit.

Ultimately, the appeal was allowed based on the Tribunal's interpretation of Rule 57A and the precedent set by previous decisions regarding MODVAT credit eligibility for inputs used in manufacturing processes.