1993 (4) TMI 137

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..... ary medicines and for the manufacture of two medicaments namely Amoxicillin Tri-hydrate and Ampicillin Tri-hydrate they bring certain common duty paid inputs, one of which is liquid nitrogen, on which modvat credit was availed of by the appellants. The other raw materials namely Danesalt and 6APA are treated in the reactor vessel with the help of liquid nitrogen, used for flushing out the air from the reactor vessel and to keep it under inert atmosphere to prevent oxidisation during reaction, to keep the atmosphere in a chilled condition and also to prevent explosion in the reactor vessel which could happen, if an inert atmosphere is not created during reaction. As a result of audit of the Factory s modvat availment, the department alleged .....

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..... ) Besides, Nitrogen has the property of being an inert gas and it is purged into the vessel directly, so as to enable proper and efficient reaction, by preventing oxidation and decomposition, as soon as the product is formed. (iii) Liquid nitrogen is purged in the reactor vessel only in the case of reaction for these two bulk drugs and the reactor vessel is used as such, without liquid nitrogen for other bulk drugs, where such inert and chilled atmosphere is not called for. (iv) Liquid nitrogen purged in the reactor vessel is vented out and is not recycled in the vessel. (v) Liquid nitrogen as raw material does not participate in the reaction, but it is pleaded that it is an essential consumable input needed for reaction to be achieve .....

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..... cified final products, for achieving the required efficiency of reaction, liquid nitrogen is purged in the reactor vessel. As seen from the write up, we find this position reflected particularly with regard to the manufacture of these two specified drugs. It is not an item like ramming mass or refractory bricks, which are constructional materials for building up furnace or for repairing and re-conditioning the furnace. Hence we are unable to persuade ourselves to accept that the ratio of Mukund Iron case on ramming mass/refractory bricks would stand attracted in the case. But we find that the ratio of the same citation (Mukund Iron case) allowing modvat in the case of acetylene gas would stand attracted. Though we agree that liquid nitrogen .....

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