9911796707
TMI Blog1999 (6) TMI 185X X X X Extracts X X X X X X X X Extracts X X X X ..... an intermediate product in any of the manufacturing process declared by the assessees and such exemption under Notification 217/86, dated 2-4-1986 as amended is not available. But the said product is exempted under Notification 31/89, dated 1-3-1989. Necessary changes have been made in the body of the said classification list and one copy of the approved classification list is enclosed herewith for your records." In the appeal before the lower appellate authority, the assessees raised the alternate plea of eligibility to the benefit of Modvat credit in terms of Rule 57(2) which provides that credit of specified duty allowed in respect of any inputs shall not be denied or varied on the ground that any intermediate products have come into existence during the course of manufacture of the final products and that such intermediate products are for the time being exempt from the whole of the duty of excise leviable thereon or chargeable to nil rate of duty. The Collector (Appeals) held that a combined reading of sub-rule 2 of Rule 57D of the Central Excise Rules, 1944 and Notification 217/86 would show that the appellants are eligible for Modvat on inputs used in the manufacture of ste ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... benefit of Modvat credit to inputs such as Sulphuric Acid, Ammonia Gas, Caustic Soda flakes and Sodium Sulphide by applying Rule 57D(2) which is attracted in the present situation, following the ratio of Tribunal's order in the case of Polychem Ltd. v. CCE, Pune Final Order No. 1792/92-WRB, dated 28-10-1992 the Revenue's reference application against this order was dismissed as reported in 1994 (74) E.L.T. 928 and the Tribunal's order in the case of High Tech. Carbon v. CCE, Allahabad reported in 1996 (88) E.L.T. 726. He has however, erred in holding that Notification 217/86 will be applicable in the facts of the present case. The contention of the Revenue that steam is a by-product and not either an input or an intermediate product in the manufacture of S.O. Dyes and Organic Chemicals is rejected, as we have already held that steam is an intermediate product in the manufacture of S.O. Dyes and Organic Chemicals. No other point has been raised by the Revenue. 5. In the result, we hold that the respondents are entitled to the benefit of Modvat credit on Sulphuric Acid, Ammonia Gas, Caustic Soda flakes and Sodium Sulphide. 6. The appeal is disposed of in the above terms. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... chemical operations including sulphonation, amination, halogenation, hydrolysis and reduction etc. and the chemical reactions are many times carried out above the room temperature and the heating of reaction mass is done by steam, electricity or gas but mostly by steam and then given the process of manufacture of steam and concluded that steam is the lifeline of many chemical reactions and operations involved in the organic synthesis to produce dye stuff. 9. To my mind it appears that the words input, intermediate product, by-product have been rather loosely used. An item can be input in one situation, intermediate product in another situation and a by-product in a third situation and how it can play any of the two roles simultaneously at all remains to be seen and sufficient material has not been produced before us to decide as to which description is more apt. From the written submissions filed by the respondents, it appears that it is an item produced within the factory and captively consumed for raising the temperature in various reactions. 10. Notification No. 217/86 applies to specified goods manufactured in a factory and used within the factory for production in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... red independently of the Notification by the proper officer in accordance with law ? Sd/- (Jyoti Balasundaram) Member (J) Dated : 26-11-1998 Sd/- (S.K. Bhatnagar) Vice President Dated : 24-11-1998 13. [Order per : G.R. Sharma, Member (T)]. - The points of reference arising out of the two proposed orders are as under : 1. Whether in view of the observations and findings of the Hon'ble Member Judicial it was required to be held that the benefit of Notification No. 217/86 has been rightly rejected by the Assistant Collector and wrongly referred to by the ld. Collector or in view of the observations of the Vice President, the Assistant Collector had wrongly rejected the benefit of Notification No. 217/86 and the Collector was justified in referring to the same question 2. Whether in view of the facts and circumstances the benefit of Modvat could be straightaway granted at the Tribunal stage or it was a separate matter which could be considered independently of the Notification by the proper officer in accordance with law ? 14. For purpose of proper appreciation of the difference arising out of the two proposed orders, let us reproduce the observations ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ration and crystallization etc. are involved in various chemical operations including sulphonation, amination, halogenation, hydrolysis and reduction etc. and the chemical reactions are many times carried out above the room temperature and the heating of reaction mass is done by steam electricity or gas but mostly by steam and then given the process of manufacture of steam and stated that steam is the life line of many chemical reactions and operations involved in the organic synthesis to produce dye stuff. The Hon'ble Vice President also observed that from the written submissions filed by the respondents, it appears that it is an item produced within the factory and captively consumed for raising the temperature in various reactions. 16. On the applicability of the benefit of Notification 217/86, the Hon'ble Vice President held : "Therefore, in my opinion the benefit of Notification No. 217/86 would be available to the respondents subject to the proviso to the Notification. ld. Collector has, therefore, not erred in referring to Notification No. 217/86 but he should not have drawn conclusions in the absence of the relevant information and there was no need for and indeed no ..... X X X X Extracts X X X X X X X X Extracts X X X X
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