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TMI Blog1993 (6) TMI 140X X X X Extracts X X X X X X X X Extracts X X X X ..... 8/- by way of reversal of Modvat Credit involving the proviso to Section 11A of Central Excise Act read with Rule 57-I of the Central Excise Rules. No penalty has been imposed in this case. 3. The facts and issues involved in both the appeals are briefly indicated below. 3.1 The appellants are engaged in the manufacture of electric lighting bulbs, fluorescent tubes. They also manufacture parts of these namely glass shells, tubes, aluminium caps, tungsten filaments etc. which are not only consumed captively but also a part of these cleared outside. They have declared the inputs required for the manufacture of glass shells and also declared glass shells as final product to be cleared free of duty. They are also using two glass shells in the manufacture of low watt bulbs, which are wholly exempt from duty. They have declared inter alia oxygen, hydrogen and molybdenum wire as inputs used in or in relation to the manufacture of their final products namely Electric lighting bulbs and fluorescent tubes. They have also declared inputs used in the manufacture of glass shells and utilised the credit of duty paid on such inputs for payment of duty on electric bulbs. 3.2 In the context o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mps and other relevant books. 6. The issues to be considered in the two appeals are the following : (i) Whether oxygen, hydrogen and molywire could be construed to be eligible inputs; used in or in relation to the manufacture of the final product namely electric lighting bulbs. (ii) Whether modvat credit in respect of duty paid on inputs used in the manufacture of glass shells captively consumed in manufacture of electric bulbs can be utilised in-terms of Rule 57D or it can be denied treating such glass sheets as final products being exempt from the whole of duty, not only for captive use but also where they are cleared outside, thus attracting the provisions of Rule 57C. (It was pleaded before us by the ld. advocate that they are already revising the credit of duty paid on inputs for glass shells, which are cleared as such outside the factory free of duty and also reverse the credit pertaining to glass shells used in exempted low watt bulbs. Hence this position is not challenged by them. Hence, we confine the issue only to input credit in respect of shells captively used, leaving the department the liberty to verify the factual position and take action on the claim made abov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o be a tool or a part of the tool or appliance. It is a consumable gas used directly for cutting, soldering etc. in the process of manufacture of electric bulbs. Without oxygen, the final product cannot be obtained. He referred to the decision of the Bench in the case of Mukund Iron Steel Works reported in 1990 (45) E.L.T. 84, wherein this Bench have allowed the duty credit in respect of oxygen and acetylene used through the medium of flame torch for cutting raises and runners of steel castings. This Bench had dismissed the Department s contention that they are tools. 7.3 Hydrogen is not used as a fuel by itself. It is only used as a protective gas for relieving the mechanical stress on tungsten coil. It is needed essentially as a protective gas in high temperature for the manufacture of tungsten filament. (iv) Glass shells are manufactured out of duty paid inputs. Wherever glass shells are cleared outside, since they are wholly exempted, they reverse the modvat credit of duty paid on inputs used in such glass shells. Likewise they do not avail Modvat credit of duty paid on inputs used in glass shells which, in turn, are used in low watt electric bulbs, which are wholly exempte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng device like scaffolding for buildings, which is removed, once the work is completed. Hence it should be construed as an appliance for supporting the filament. Since its function is purely to provide mechanical support and it is not present in the final product, it is not to be treated as a consumable but only as an appliance. 8.4 The specific usage of inputs was not revealed to the department. This is only within the knowledge of the appellant. Modvat scheme is based on trust and is allowed on mere filing the declaration. Hence the allegation of suppression of material factors for irregularly availing Modvat credit is sustainable. 8.5 As regards credit of duty on inputs used in glass shells captively used, he supported the order. He desires that the department should be given the liberty to deny Modvat credit of duty paid inputs consumed in the manufacture of glass shells cleared as such outside or used in exempted varieties of electric bulbs. (We have already given the liberty and this contention is not challenged by Shri Willingdon, who has clearly indicated that the challenge is only against denial of credit of duty paid on inputs for glass shells captively used for furth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... combustion (vide Condensed Chemical Dictionary - 10th edition). As against this, in the same book, L.P.G. is stated to be fuel and used as domestic, industrial and automotive fuel and also used for welding, brazing and metal cutting. Hence, we cannot regard oxygen as a fuel but can construe it to be an aid to combustion. It is a catalyst for burning and produces the required degree of flame for the specific operation. Even if it is a fuel, can it be excluded from the eligibility? L.P.G. is not notified under the notification under Rule 57A, while oxygen is covered by the said notification. L.P.G. is specifically barred from the benefit of duty credit. However, when oxygen is notified under Modvat scheme as an eligible input, its usage as a fuel per se is not barred by the explanation to Rule 57A. The only requirement to be ensured is that such oxygen is used in or in relation to the manufacture of final product. It is not the case of the Department that here, oxygen is used as a fuel or aid to fuel for cooking in the canteen or for room heating or for any general purposes in the factory. Though a reference is made in the statement of excise clerk and production manager that oxygen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e to hold that presence of hydrogen in the high temperature zone of annealing chamber is necessary for obtaining the proper geometrical shape of the tungsten coil, which is essential for electric bulb. Hence we allow Modvat credit of duty paid on hydrogen for the above use. If hydrogen gas is used for any other general purposes (not discussed herein before) the department is at liberty to look into that aspect independently. 9.4 Molybdenum wire (Molywire) : As seen from the book The metallurgy of Doped/Non-sag tungsten edited by Erwin Pink and Laslo Bortha, Molywire is used in the coiling of tungsten wire in the following manner. Although the differences in machinery and process conditions exist, the functions of the processing steps are the same everywhere. They can be described as follows - - Making the first coiling by winding tungsten wire around a molybdenum Mandrel - Making the second coiling by winding the first coiling around a mandrel; the latter can be a molybdenum wire (continuous second coiling) or a retractable steel pin (coiling, stabilising at elevated temperature, cutting) - Clearing or degreasing (optional) - Annealing for stabilizing the geometrical s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sed in the manufacture of glass shells used in the manufacture of dutiable electric bulbs can be admissible. The department contends that glass shell is per se a final product removed as such. There is a general exemption for such glass shells used in lamp industry. Hence Rule 57C is attracted even for their removals for captive use within the factory, since such removals of glass shells (finished product) are even otherwise exempted. We are unable to agree to this proposition for the following reasons. (i) There is no dispute that glass shells are essential components of electric bulbs. (ii) Duty paid notified inputs are used in the manufacture of such glass shells. (iii) Glass shells, even if removed outside, can go out only as components for electric bulbs and their usage is only for further manufacture of electric bulbs. Hence their status as a component or intermediary product is not affected. Moreover, the terms inputs, intermediate goods and final products are relative to the stage of manufacture undertaken by each manufacturer. They cannot be given a static meaning. In so far as glass shells used within the factory of production for further manufacture of electric ..... X X X X Extracts X X X X X X X X Extracts X X X X
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