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TMI Blog1998 (6) TMI 266X X X X Extracts X X X X X X X X Extracts X X X X ..... ot be eligible for the benefit of Modvat credit. In view of the above, we hold that the plea of appellants cannot be accepted. (2) Sulphuric Acid The learned Consultant has referred us to the use as stated in the notes submitted. The use of the sulphuric acid is for treatment of water which is used in the cooling system and not as an inprocess material. Cooling system is an equipment and the water used is to make this functional. Heard the learned DR. In that view of the matter, the use cannot be held to be in or in relation to the manufacture of the declared product, namely cement. Hence, the plea of the appellants cannot be accepted in this regard. (3) Hydrochloric Acid/Caustic Soda The use is for regeneration of the resins which is a separate activity. The resins by themselves which participate in the process leading to the generation of power to be used in the plant may have a case for being considered as an input as the process of regeneration of the same is for the start of the manufacturing process. Heard the learned DR. For the above reason these inputs can be considered to be an use in or in relation to the manufacture of the finished product. Therefore, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of water for making the water ready for use in the process of manufacture of paper. In the case of Andhra Pradesh Paper Mills Ltd. v. C.C.E., reported in 1990 (50) E.L.T. 252, this Bench of the Tribunal has held as under : It is thus seen that the Hon ble Supreme Court has held that so long as it can be shown that the materials used as inputs have a nexus with the process which is integrally connected with the ultimate production of goods till the same are fit for being put in the marketing stream and such process is so integrally connected with ultimate production of goods that it would be commercially inexpedient to produce the finished goods without that process, all such inputs would get the benefit of credit of duty. It is observed that the stress is on the process which are integrally connected with the production of the goods. Therefore, for the items to pass the test of eligibility to the benefit of the Modvat credit will be such that they participate in the process of manufacture without which the end product cannot be produced. In the present case, in the case of chemicals used, the learned SDR fairly concedes that so far as softening of water is concerned, the same ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tep further." (4) Paints (Anti coating) Admittedly, the use is for protection of the equipment and the use has to be held to be for maintenance of the equipment. When these inputs at the relevant time were not being considered as an eligible input for the benefit of Modvat credit, the question of therefore treating the paints as an input would not arise. (5) Branding Inks The ink is used for marking in the bags and the use is for making the goods ready for marketing. It has been held by the Hon ble Supreme Court that materials or items used to make the finished product marketable have to be held to used in or in relation to the manufacture of the finished product. We, therefore, hold that Modvat credit in respect of this item has to be allowed. (6) Pentolite Booster The learned Counsel pleaded that the lower authority has ruled in favour of the assessee and therefore, no order is required to be passed in regard to this item. (7) Refractory cement, Fire Bricks/Refractory bricks, Carbon brushes/Electrode and similar items, Diodes, Transistors, Wires and Cables. It is seen that the use of some of these items for maintenance of equipment while others constitute parts of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at in the case of Gujarat Alkalies and Chemicals Ltd. v. Collector of Central Excise (supra). (c) Acetylene and Oxygen gases used for cutting scraps before they are fed into furnace for melting, has been considered as eligible inputs for benefit of Modvat credit as in the case of Collector of Central Excise v. Brindavan Alloys Ltd. as reported in 1994 (69) E.L.T. 764. (d) Nitrogen gas used to create inert atmosphere in relation to the manufacture of MMM Monomer has been held to be eligible input for grant of Modvat credit, 1994 (69) E.L.T. 698. (e) Oxygen gas being used to generate high temperature of process of sealing of electronic gun on to glass shell for transmission of electron to TV screens has been considered as an input and held to be eligible for Modvat credit in the case of Samtel India Ltd. v. Collector of Central Excise as reported in 1994 (71) E.L.T. 737. (f) Hydrofluoric acid used in chemical wash of inert glass shell has been held to be an essential requirement for process of Phosphorous coating of glass shell and held to be eligible for the Modvat benefit in Samtel India (supra). 2. Sulphuric Acid The write up states as follows :- This acid is us ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oating) The write up states as follows :- In all the mills, the draft through the mill is created by induced draft fans. The gases carry along with it fine dust, which passes through these fans. Due to moisture content in the raw material being ground, this dust forms a coating on the fans leading to severe vibrations and loss in efficiency. This paint is used as a coating on the fan impeller which does not allow the dust to settle, thus avoids vibration and loss of efficiency. I agree with my learned Brother for denying the benefit of Modvat credit, in the light of the reasoning given by them. 5. Branding Inks The write up states as follows :- The marking on bag used for packing of cement is a statutory requirement as per the format approved by the Bureau of Indian Standards which include the name and full address of the manufacturer, the relevant ISI Specification number, licence No. ISI Logo and week, month, year of manufacture, trade mark and grade of cement etc. without marking on the bags, as per the approved format, no packing operation can be carried out and hence it is necessary requirement for despatch of cement. I agree for grant of benefit in the light ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lectrical Insulators These are used in conjunction with wires, cables and conductors for carrying current and voltages to the desired machinery. Electrical parts of machinery The various parts such as : (1) Breakers (2) Transformers (3) Starters (4) MCB s (Moulded Circuit Breakers) (5) Protective relays These are used for controlling the current and voltage which are feeding to various sub-stations and machineries to control the voltages and current as per the requirement of the cement machinery and inturn the process." (i) Refractory Cement Mortars and similar compositions In the case of Collector of Central Excise v. Raipur Alloy Steel Ltd. - 1995 (78) E.L.T. 44, the Tribunal by majority has held Dead burnt magnesite being a chemical used for protecting equipment is not covered by any of the excluded category under Rule 57A and hence granted benefit for the same. While for Refractory bricks it was held as constructional material and essential part of furnace and covered by excluded category under Rule 57A of the Central Excise Rules and hence Modvat credit was held as not admissible. In view of this judgment, I hold that this item is not entitled for the bene ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... per : V.K. Ashtana, Member (T)]. - In this appeal, there has arisen a difference of opinion between Hon ble Member Shri V.P. Gulati (since retired) and Hon ble Member (J), Shri S.L. Peeran. A reference thereon to the undersigned lies for consideration on the following :- i. Whether the appellants are entitled for the Modvat credit or not in respect of the following items. (i) Oxygen in Cylinder/Dissolved Acetylene (ii) Sulphuric Acid 6. Heard learned Consultant Shri C. Chidambaram. He cited decisions in his favour as follows :- (i) Union Carbide (I) - 1996 (80) E.L.T. 613 (ii) Saurashtra Chemicals - 1995 (80) E.L.T. 302 (iii) Gujarat Alkalies Chemicals Ltd. - 1996 (81) E.L.T. 117 (iv) J.K. Cotton Spinning Weaving Co., wherein Hon ble Supreme Court had discussed the words and phrases in relation to manufacture to mean encompassing the entire process. (v) Rajasthan State Chemical Works - 1991 (55) E.L.T. 444 (S.C.) - real test is `essential for manufacturing . 7. Learned Consultant further stressed that he supported opinion of Hon ble Member (J) in the subject order since no case laws were considered in Hon ble Member (T) s order. 8. Heard learned JD ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the final product as distinct from use of Sulphuric/Hydrochloric Acid in effluent treatment plants, where for ecological considerations, effluent obtained during/after production of final product, is to be treated, before discharge. In the latter case a view can be taken that since this is an activity undertaken after the final product has already come into existence, therefore, credit is not allowed being not in relation thereto. In the instant case, a wider view is necessary encompassing the entire manufacturing process. Sulphuric Acid is necessary to captively produce electricity. Without electricity cement cannot be produced. Therefore, in cases where electricity is captively produced, all processes directly related thereto would be within the ambit of the manufacturing process and the inputs required, therefore, would qualify. Sulphuric Acid, in this case, therefore, is eligible for Modvat credit. 14. In view of the aforesaid discussions, I most respectfully differ with the opinions of Hon ble Member (T) Shri V.P. Gulati and agree most humbly, with the views of Hon ble Member (J), Shri S.L. Peeran. Sd/- (V.K. Ashtana) Member ..... X X X X Extracts X X X X X X X X Extracts X X X X
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