1993 (6) TMI 147 - AT - Central Excise

Summary

Issues:
Whether phosphoric acid added to cane juice for the purpose of meeting the deficiency of phosphate contents in the cane juice is eligible for modvat credit in respect of payment of duty on the final product - crystal sugar.

Analysis:
The judgment involves three appeals that were considered together as they revolved around the same issue. The appeals challenged orders passed by the Collector of Central Excise (Appeals), Bombay regarding the eligibility of modvat credit for phosphoric acid added to cane juice for the production of crystal sugar.

The appellant's consultant argued that a previous Bench decision supported their claim for modvat credit. On the other hand, the respondent's representative contended that commercial sugar could be produced without using phosphoric acid, citing Board instructions and trade notices to support their argument.

The Tribunal found that phosphoric acid was added to cane juice to achieve the desired level of clarification necessary for obtaining quality crystal sugar. While natural cane may contain phosphoric acid, its adequacy for the clarification process depends on various factors. The Tribunal referenced technical opinions and the handbook of Cane Sugar Engineering by E. Hugot to support this finding.

The Assistant Collector had held that phosphoric acid was not an indispensable material for sugar production and was added only when P 205 content was low in cane juice. However, the Tribunal disagreed, stating that phosphoric acid was essential for achieving the required whiteness of sugar and thus qualified as an input for the manufacture of quality sugar.

Regarding the Collector (Appeals) view that phosphoric acid was a tool or appliance, the Tribunal disagreed, stating that it was a chemical added to the product mix for clarification purposes and therefore should be considered an input. The Tribunal also rejected the Board's clarification that sugar could be produced without phosphoric acid, emphasizing the necessity of its addition for achieving the final product quality.

In conclusion, the Tribunal allowed the appeals and directed the authorities to restore the modvat credit, emphasizing the essential role of phosphoric acid in the manufacturing process of crystal sugar.