2000 (1) TMI 426 - AT - Central Excise

Summary

Issues:
1. Whether hydrogen, permasil, and mercury cathodes used by the respondent in its factory are inputs entitled to duty credit.

Analysis:
1. The appeal contests whether hydrogen used by the respondent is an input for the final product. The Collector (Appeals) found that hydrogen is essential for producing nitrogen, which is used as a coolant in the manufacturing process. The respondent argues that since hydrogen is not part of the final product, it should not be considered an input. Reference is made to a previous Tribunal decision for support.

2. Another appeal raises concerns about the classification of hydrogen as an input, arguing that nitrogen, produced using hydrogen, is not subject to duty and is not directly used in manufacturing sodium cyanide. The Collector (Appeals) did not find evidence to support the claim that hydrogen is used to flush the system, confirming that hydrogen is indeed used to produce nitrogen, a crucial element in the manufacturing process.

3. The Tribunal established that any item used in or related to the final product's manufacture qualifies as an input eligible for duty credit unless explicitly excluded. The use of hydrogen in producing nitrogen, which is integral to the manufacturing process, justifies considering hydrogen as an input. The absence of duty on nitrogen does not negate the credit eligibility for duty paid on hydrogen.

4. Regarding permasil and mercury cathodes, they are deemed inputs used in the electrolysis process to manufacture caustic soda. The argument that they are machinery or equipment is refuted, as they are chemical compounds and not machines. The composition of mercury cathode is debated, with the conclusion that it functions as a machinery part, not explicitly excluded under Rule 57A, thus eligible for duty credit.

5. The Tribunal upheld the Collector (Appeals) decision, dismissing all appeals as there was no valid reason to interfere with the findings. The judgment affirms the eligibility of hydrogen, permasil, and mercury cathodes as inputs entitled to duty credit in the manufacturing process.