Modvat credit on caustic soda recognised for boiler water treatment, fumes neutralisation and equipment descaling in sugar manufacture

Caustic soda used in sugar manufacture was treated as an admissible Modvat input when deployed for demineralising boiler feed water that generated steam for production, for neutralising sulphuric acid fumes in the vacuum pan, and for descaling evaporator and pan body tubes. The Tribunal applied the principle that materials directly connected with manufacture, including those used to clean equipment and machinery employed in the process, fall within Rule 57A of the Central Excise Rules, 1944. On that basis, all three uses were regarded as eligible for credit.

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Issues: Whether caustic soda used for demineralisation of boiler feed water, for neutralising sulphuric acid fumes in the vacuum pan, and for descaling evaporator and pan body tubes was an admissible input for Modvat credit in the manufacture of sugar.

Analysis: Caustic soda used for demineralisation of boiler water, which ultimately generated steam used in sugar production, was treated as an eligible input. Its use in the vacuum pan for mixing with spray water to neutralise liberated sulphuric acid fumes was directly connected with manufacture and therefore admissible. For descaling of evaporator and pan body tubes, the Tribunal applied the principle that materials used for cleaning equipment and machinery employed in manufacture are inputs within Rule 57A of the Central Excise Rules, 1944.

Conclusion: Caustic soda was admissible as an input for Modvat credit on all three uses and the appeal was allowed.

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