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TMI Blog1998 (3) TMI 222X X X X Extracts X X X X X X X X Extracts X X X X ..... on on 8-8-1991 in respect of inputs under Rule 57A used in or in relation to the manufacture of final products. 3. He further submitted that water is main ingredient in aerated water consisting of 90% of aerated water. The water used in manufacture of aerated water contains minerals and vegetation and would make the water unsatisfactory for preparation of aerated water. He further submitted that it is essential to remove the solid matter and odour from the water. Therefore the water is first treated in the plant with soda ash, lime and bleaching powder. Thereafter the treated water is filtered through the filter and carbon filter when activated carbon is used to remove the colour and odour. He further submitted that soda ash is also used for killing the micro-organism that are left over in the equipment. The soda ash is also used in cleaning the glass bottles. He relied upon the decision of the Tribunal in the case of Black Diamond Beverages Ltd. - 1994 (69) E.L.T. 572. The Tribunal in this case allowed the benefit of Modvat credit in respect of caustic soda used for washing glass bottles for aerated water. 4. In respect of filter paper, the ld. Counsel submitted that simple su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng the water and thereafter the water is used in the final product and also for cleaning the glass bottles. The Tribunal in the case of Black Diamond and Beverages (supra) held that washing the bottles of aerated water is mandatory requirement for Prevention of Food Adulteration Act, 1955 and hence it is a process of incidental or ancillary to the completion of manufactured product in marketable form. The Tribunal held that without cleaning the bottles the filling cannot be undertaken as per the statutory requirement and as such for cleaning process, the soda ash plays a part. In the present case the soda ash is used for washing the glass bottles and for softening the water. Following the ratio of the decision of Tribunal in the case of Black Diamond and Beverages (supra), we hold that the appellants are entitled to the benefit of Modvat credit in respect of soda ash used in softening the water and for cleaning the bottles. 8. In the impugned order, the benefit on filter paper is denied on the ground that filter paper is used in the machine namely in the filter press. Hence it cannot be accepted as an input. The filter paper is used to filter the sugar syrup which is further used ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... st of the colour, odour and some organic impurities are removed from sugar syrup by the activity of activated carbon. This treated syrup is passed through filter press fitted with filter papers and heat exchanged and clear syrup is collected in the syrup mixing tank. Filter papers help in the removal of impurities in sugar and also the activated carbon and filter aid added in the mixing tank. The essence and sugar syrup are mixed in the tank by the help of mechanical stirrer and finally, the flavour syrup is ready for use in finished products. The second process is water treatment. As an added ingredient, ingredient, water can comprise up to 90% of a soft drink. The quality of water is thus of particular importance to the soft drinks manufacturers. In this process, we continuously feed water from Bore Well to our treatment tank and water treatment chemicals such as Hydrated lime, bleaching powder and Ferrous Sulphate are also dosed continuously to tank and mixed in the process and treated water is taken to the storage tank. The objects of water treatment are as follows :- 1. Uniform water at all seasons of the year. 2. Removal of colloidal and suspended matters. 3. Removal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion towards the above manufacturing process emphasising in his own way the aspects relevant for the purpose of deciding this case as brought out in paras 2 to 5 of this order. He had in addition drawn our attention to the Encyclopedia of Chemical Technology (2nd Edition P. 710-720) by Kirk Othmer which refers to carbonated beverages and indicates their ingredients and the manufacturing process in details incorporating the use of various items in such a process including, inter alia, activated carbon, colours, flavours, carbon dioxide, preservatives and packaging. While referring to packaging they also refer to bottles and bottle washing and use of washing chemical etc. in bottle washing and further mention, inter alia, that re-usable bottles make bottle washing an important part of production of carbonated beverages. The bottles for carbonated beverage must be of good mechanical strength, attractive in appearance and sterile for each use." Bottles are cleaned and sterilised with warm alkaline solution, then rinsed with potable water . The alkaline solution can be composed of caustic soda (Sodium Hydroxide), sodium carbonate, tri-sodium phosphate or sodium meta silicate. Caustic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the relevant period. It is significant that (apart from the tariff position) even otherwise certain beverages such as aerated water become marketable only when packed in a container (glass bottle, plastic bottle, tin can or tetra-pack etc.) and it was each such bottle (or container) which was a unit of sale. I therefore consider that glass bottle is an essential input required in or in relation to the process of manufacture of the final product as sold in the market. Hence, if the bottles received were duty paid the Modvat credit was required to be allowed. (The Addl. Collector had however, remanded the matter in respect of the bottles and a long time has passed since then and we do not know whether the A.C. has since already taken further action in the light of the Addl. Collector s order. The Addl. Collector s reference to balance sheet is not understandable. However, if some order has already been passed, as mentioned by my ld. Colleague the law will take its own course). 15. The fact that the bottles were reusable and returnable containers would only affect this position to the extent that the authorities below are required to ensure that credit is not repeatedly availed in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... human consumption. In other words these items were not merely required in connection with an incidental or ancillary process but were essential inputs for the purpose of manufacture of the final product. Further, the filter papers were also consumable items used in relation to the process of manufacture. 19. Similarly the crown cork (another item) was essential for marketing the goods and therefore, covered by the term `input eligible for Modvat credit. 20. The department has not been able to show that the inputs in question or the finished product for that matter were eligible to any notification exempting them from the whole of duty leviable thereon during the relevant period. Therefore, all that we have to see is whether the inputs and outputs in question were covered by the Rule 57A read with Notification No. 177/86, dated 1-3-1986 (as amended) and in force during the relevant period. In this connection, it is seen that the ld. Counsel is correct in pointing out that w.e.f. 25-7-1991 aerated water was included as a specified final product under Rule 57A; and it is observed in this connection that Notification No. 177/86 as amen- ded from time to time and in force during t ..... 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