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TMI Blog1997 (3) TMI 404X X X X Extracts X X X X X X X X Extracts X X X X ..... tentions raised in the appeal challenging the findings in the impugned order. 2. Respondents are engaged in the manufacture of caustic soda by electrolysis process. In such manufacturing process, by electrolysis of brine solution in electrolysis cells, mercury is used as cathode and graphite as anode. Respondents took Modvat credit in respect of duty paid on the mercury used as cathode and graphite used as anode. The Assistant Collector, after issue of show cause notice and grant of personal hearing, disallowed Modvat credit and confirmed the demand contained in the notice. He observed that the Collector (Appeals) had, in Order-in-Appeal No. 76/CE/APPL/JPR/93, dated 14-5-1993 in the case of the present respondents themselves, disallowed t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e used in the manufacture of caustic soda. The electrodes are basically part of the electrolysis cells which is nothing but machinery. Since explanation to Rule 57A of Central Excise Rules clarifies that inputs did not include machinery, machines, equipment, apparatus and appliances used for producing or processing goods or for bringing about any change in any substance in relation to the manufacture of final products, electrodes, being part and parcel of the machines, would stand excluded for being considered to be inputs. It is stated that the Tribunal s decisions cited before the Collector (Appeals) and followed by him had not been accepted by the Department and reference applications had been filed. 4. In support of the stand taken by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Limited [1989 (41) E.L.T. 424], Travancore Cochin Chemicals [1990 (50) E.L.T. 172] and Collector of Central Excise v. Standard Alkali [1992 (59) E.L.T. 127]. These decisions covered the same question of Modvat eligibility of electrodes used in manufacture of caustic soda. In coming to this conclusion, the Larger Bench took note of the fact that the relevant criterion for qualifying for Modvat benefits use in or in relation to the manufacture of the final product and that the excluded items were machines, machinery, plant, equipment, apparatus, tools or appliances. It was noticed by the Bench that almost all the words used in the explanation clause relate to full and complete assemblages which could be described as machine, machinery, etc. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is not identifiable on that score as a machine part. That apart, such mercury also takes further part in the manufacturing process. when sodium chloride present in the brine solution is electrolytically decomposed into sodium and chlorine, the former reacts with the mercury to form sodium amalgam and when the latter reacts with water such reaction is more controlled than when sodium metal itself would directly react with water to form sodium hydroxide. Thus, the role of mercury is not confined only to its function as an electrode. It also takes part in the chemical reaction. Hence there is no scope for doubt at all about its entitlement for the benefit under Rule 57A which is admissible to goods used in or in relation to the manufacture of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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