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TMI Blog2007 (7) TMI 2X X X X Extracts X X X X X X X X Extracts X X X X ..... n Low Sulphur Heavy Stock (LSHS) and furnace oil used for generating electricity captively consumed for the manufacture of the final products such as caustic soda, cement etc. 3. For the sake of convenience we may refer to the facts in the case of Civil Appeal No. 6465-6475 of 2001 - Commr. of Central Excise others v. M/s. Solaris Chemtech Ltd. and others (earlier known as 'M/s. Ballarpur Industries Ltd.'). 4. Low Sulphur Heavy Stock (LSHS) is used by the assessees as fuel for generating electricity which in turn is captively consumed for the production of caustic soda and cement. 5. Rule 57A (MODVAT Rule) reads as under: "Rule 57A. Applicability. - (1) The provisions of this section shall apply to such finished excisable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or producing or processing of any goods or for bringing about any change in any substance in or in relation to the manufacture of the final products; (ii) packaging materials in respect of which any exemption to the extent of the duty of excise payable on the value of the packaging materials is being availed of for packaging any final products; (iii) packaging materials the cost of which is not included or had not been included during the preceding financial year in the assessable value of the final products under section 4 of the Act; (iv) cylinders for packing gases; (v) plywood for tea (chests; or) (vi) bags or sacks made out of fabrics (whether or not coated, covered or laminated with any other material) woven from strips or t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ich is captively consumed and used to manufacture cement/caustic soda. Rule 57A, quoted above, has an Explanation clause which stated as to what inputs are included in MODVAT credit. Explanation clause (c) refers to "input used as fuel". This clause was introduced by Notification No. 4/94. At that time the Government made it clear that inputs used as fuel were entitled to MODVAT credit. That fuel either utilized directly or for generating electricity, as an intermediary product, is integrally connected with several operations which results in the emergence of the final product, namely, cement/caustic soda. It is important to note that with out utilization of LSHS, it is not possible to manufacture cement/caustic soda. The electrolysis proce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uct. The said expression normally covers the entire process of converting raw-materials into finished goods such as caustic soda, cement etc. However, the matter does not end with the said expression. The expression also covers inputs "used in relation to the manufacture of final products". It is interesting to note that the said expression, namely, "in relation to" also finds place in the extended definition of the word "manufacture" in Section 2(f) of the Central Excises and Salt Act, 1944 (for short, 'the said Act'). It is for this reason that this Court has repeatedly held that the expression "in relation to" must be given a wide connotation. The Explanation to Rule 57A shows an inclusive definition of the word "inputs". There fore, tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ubt may arise only in regard to use of some articles not in the mainstream of manufacturing process but something which is used for rendering final product marketable or something used otherwise in assisting the process of manufacture. This doubt is set at rest by use of the words "used in relation to manufacture". In the present case, the LSHS is used to generate electricity which is captively consumed. With out continuous supply of such electricity generated in the plant it is not possible to manufacture cement, caustic soda etc. Without such supply the process of electrolysis was not possible. Therefore, keeping in mind the expression "used in relation to the manufacture" in Rule 57A we are of the view that the assessees were entitled to ..... X X X X Extracts X X X X X X X X Extracts X X X X
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