Modvat credit on effluent treatment inputs allowed where acid used in treatment plant formed part of manufacturing activity

Hydrochloric acid used in an effluent treatment plant was treated as part of the manufacturing activity because effluent treatment is an essential and integral component of the process. On that basis, materials and apparatus used for such treatment were regarded as eligible inputs, and Modvat credit was allowed in favour of the assessee.

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Issues: Whether hydrochloric acid used in an effluent treatment plant is eligible for Modvat credit.

Analysis: The issue was examined on the basis of the Supreme Court's view that treatment of effluents is an essential and integral part of the manufacturing process. The apparatus and materials used for such treatment form part of the manufacturing activity, and the same principle was applied to the present facts.

Conclusion: Hydrochloric acid used for the effluent treatment plant was held eligible for Modvat credit, and the claim was accepted in favour of the assessee.

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