1990 (12) TMI 243 - AT - Central Excise

Summary

Issues:
Availability of MODVAT Credit for mercury used as cathode in the electrolytical process during the manufacture of caustic soda.

Analysis:
The appeal was filed by the Collector of Central Excise, Coimbatore against the order of the Collector of Central Excise (Appeals), Madras regarding the availability of MODVAT Credit for mercury used in the electrolytical process. The Collector (Appeals) had accepted the appellant's ground that mercury is eligible for MODVAT Credit based on specific government orders related to MODVAT. The Revenue appealed this decision, arguing that mercury is part of the equipment and therefore not eligible for MODVAT Credit. The Respondents contended that mercury acts as electrodes and gets consumed during the manufacturing process. They cited precedents where MODVAT Credit was allowed for similar inputs like aluminium sheets and electrodes. The Tribunal noted that the mercury used as cathodes gets consumed during the process, and there was no rebuttal to this fact. The Tribunal referred to previous cases where inputs like aluminium sheets were considered eligible for MODVAT Credit as they were directly used in the manufacturing process and not as standalone equipment. The Tribunal highlighted the wide interpretation of the term "in or in relation to the manufacture" under Rule 57A and upheld the lower authority's order, dismissing the Revenue's appeal.

In conclusion, the Tribunal found that the mercury used as electrodes in the electrolytical process qualifies for MODVAT Credit based on previous decisions and the wide interpretation of the term "in relation to the manufacture" under Rule 57A. The Tribunal's decision was in favor of the Respondents, upholding the lower authority's order and dismissing the Revenue's appeal.