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TMI Blog1995 (5) TMI 144X X X X Extracts X X X X X X X X Extracts X X X X ..... ature for conservation of heat within the furnace, they are essential `inputs` within the wide meaning of that expression in Rule 57A as they are admittedly used `in relation to the manufacture of` aluminium. In support of his argument, he cites the judgment of the Hon`ble Calcutta High Court in the case of Singh Alloys Steel Limited Another v. Assistant Collector of Central Excise, Durgapur Steel Division, [1993 (66) E.L.T. 594 (Cal.)] which has been followed by the Larger Bench of the Tribunal in the case of A.B. Tools wherein the benefit of modvat has been extended to dolopatch mix magnesite peas and ramming mass used in the manufacture of steel ingots and submits that the same benefit should be made available to refractory bricks which serve the same purpose i.e. of reduction of erosion of the refractory lining of the furnace. He also highlights the fact that the High Court has specifically overruled the Tribunal order in the case of Mukund Iron Steel Ltd. v. Collector of Central Excise - [1990 (45) E.L.T. 84] holding that refractory bricks were not eligible for Modvat credit. He therefore, seeks waiver of pre-deposit of the duty demand and stay of its recover ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... furnace and to reduce the erosion of the refractory lining of the furnace. The items lose their identity and are consumed in the process. Some part of the items remain in the liquid metal which forms the ingot and the balance forms part of the residue or slag. The ingots can be manufactured in the furnace without these items.There would then be a possibility of the furnace being damaged and more down time would be required resulting in loss of productivity." The Court further held as under :- As far as the merits of the case are concerned, there is no dispute that the items in question are inputs within the meaning of the explanation to Rule 57-A but according to the respondent authorities the items come within the excluded items. It is said that the items in question form part of the machinery because they are really used to protect the machinery and not for the manufacture of the ingot itself. In the case of Satya Steel Strips (supra) the Tribunal held that the ramming mass was used to coat the bricks with which the furnace was lined in order to withstand the degree of heat in melting iron. This being so, according to the Tribunal, ramming mass was essentially a part of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in or in relation to the manufacture of ingots." None of these definitions would include items like chemicals such as the items in question. It may be noted that as far as the Tariff Act of 1985 is concerned, plant, machinery machines, equipment, apparatus, tools and appliances are all classified under Headings and sections which are totally different from the Headings and Sections under which the items are classified. The Tribunal has erred in seeking to limit the meaning of the word `inputs` to those items which go into the steel ingot completely overlooking the phrase `in relation to ` in the definition in the major clause of the explanation. The respondents then argued that steel ingots could be manufactured even without the items. That may be so, but that is immaterial. The definition of inputs is not dependent upon what ought to be used but what is in fact used. There is no dispute that the petitioner No. 1 had in fact, used and uses the items in the manufacturing of ingots. The Supreme Court has also held that manufacture would include a process which was commercially expedient in the production of goods (See - Collector of Central Excise v. East End Paper Industries ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e input in question was used in or in relation to the manufacture of steel, the question to be looked into should have been whether this input is covered by any of the categories in the exclusion clause. In other words, having held that the input in question was in fact an input in relation to the manufacture of final product, it should have been looked into whether such input still stood excluded from the benefit of Modvat for the reason of being apparatus, appliances, equipment, machine, machinery, plant and tool. It was in this context that Hon`ble Court referred to nature of ramming mass. The Court observed that it was not disputed that ramming mass was classified as miscellaneous chemical products under Chapter 38 of the Schedule to the Central Excise Tariff Act, 1985. These items, the Hon`ble Court held, are first charged into the furnace as fettling materials. The items dissolve and seal the crevices in the refractory walls of the furnace to prevent leaking of the liquid metal from the furnace and to reduce the erosion of the refractory lining of the furnace. The items lose their identity and are consumed in the process. Some parts of the items remain in the liquid metal wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the following question is referred to the Hon`ble President for resolution by a third Member :- Whether the pre-deposit of duty is to be waived and recovery stayed as proposed by the Member (Judicial) or the stay application is to be rejected as proposed by Member (Technical)? Sd/- (Shiben K. Dhar) Member (T) Sd/- (Jyoti Balasundaram) Member (J) Dated : 28-6-1994 9. [Order per : P.K. Kapoor, Member (T)]. - On the point of difference referred to me, I have heard both sides. Appearing on behalf of the applicant, Shri Nambirajan, Learned Advocate submitted that the refractory bricks was not an item covered by any of the category in the exclusion clause under Rule 57A. He argued that refractory bricks used for lining of various furnaces meant for mnufacture of steel have to be deemed as `inputs` as they require constant replacement and get consumed. He contended that Modvat credit on such refractory material is admissible on the ratio of the judgment of the Calcutta High Court in the case of Singh Alloys Steel Limited Another v. Assistant Collector of Central Excise, Durgapur (supra) which had also been followed in the Larger Bench decision of the Tribunal i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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