2000 (1) TMI 614 - AT - Central Excise

Summary

Issues:
- Extension of Modvat credit for Lubricating Oil and Grease
- Extension of Modvat credit for Caustic Soda
- Extension of Modvat credit for Organo Sulphur Compounds
- Extension of Modvat credit for Other Organic Compounds

Extension of Modvat credit for Lubricating Oil and Grease:
The Revenue challenged the order extending Modvat credit to the respondents for Lubricating Oil and Grease. The Commissioner (Appeals) justified the extension based on various Tribunal decisions, including Pragati Paper Mills case, stating Lubricating Oil as an admissible Modvatable input. The Commissioner's decision was supported by additional cases where Modvat benefits were granted for Lubricating Oils and Greases. The Tribunal refused to refer the matter to a larger bench or the High Court, indicating consistency in previous decisions. Hence, the order extending Modvat credit for Lubricating Oil and Grease was upheld.

Extension of Modvat credit for Caustic Soda:
Regarding Caustic Soda, the Commissioner (Appeals) granted Modvat credit based on its usage in evaporators and pans for softening scales and cleaning deposits, supported by the Saurashtra Chemicals case. The Revenue argued that the usage in the present case differs from the Saurashtra Chemicals case, but the Tribunal held that Caustic Soda's role in softening water and tubes is essential for the manufacturing process, making it an eligible Modvatable input. The order extending Modvat credit for Caustic Soda was deemed reasonable and upheld.

Extension of Modvat credit for Organo Sulphur Compounds:
For Organo Sulphur Compounds, specifically Chemocide-800 and Chemocide-803, the Commissioner (Appeals) justified the extension of Modvat credit. Chemocide-800 was considered crucial in protecting juice from bacterial infection during sugar manufacturing, while Chemocide-803 was used in cooling tower water to prevent algae and fungi. The Commissioner extended the benefit, emphasizing the indirect but essential role of these compounds in sugar production. The Tribunal clarified that direct presence in the final product is not necessary for Modvat credit eligibility, as long as the item is used in relation to manufacturing. Absence of specific judicial rulings on these compounds was not a valid reason to deny Modvat credit. Therefore, the extension of Modvat credit for Organo Sulphur Compounds was upheld.

Extension of Modvat credit for Other Organic Compounds:
The Commissioner (Appeals) approved the Modvat credit for Other Organic Compounds, highlighting their role as viscosity reducers for better quality sugar production. These compounds aid in purging and color enhancement of sugar, making them essential inputs. The Tribunal found the Commissioner's decision reasonable, and no flaws were identified. Consequently, the extension of Modvat credit for Other Organic Compounds was upheld.

In conclusion, the Tribunal upheld the Commissioner (Appeals) order, rejecting the Revenue's appeal against the extension of Modvat credit for Lubricating Oil and Grease, Caustic Soda, Organo Sulphur Compounds, and Other Organic Compounds.