1997 (12) TMI 637 - AT - Central Excise

Mercury in Electrolysis not Input for Caustic Soda Production

The Tribunal dismissed the appeal, ruling that mercury used in the electrolysis of brine for caustic soda does not qualify as an input under Rule 57A, ... Input under Rule 57A - CENVAT credit - mercury as cathode not forming part of machinery - Explanation to Rule 57A excluding parts of machinesInput under Rule 57A - mercury as cathode not forming part of machinery - CENVAT credit - Explanation to Rule 57A excluding parts of machines - Whether mercury used as cathode in the electrolysis of brine for manufacture of caustic soda is an input for the purposes of Rule 57A and eligible for credit. - HELD THAT: - The Collector (Appeals) had followed the Tribunal decision in C.C.E. v. Mettur Chemicals & Industrials and treated mercury used as a cathode as an input. The departmental contention that mercury should be treated as part of the machinery because it functions as the cathode and is essential to the electrolysis process was considered and rejected. The Tribunal's earlier finding that mercury, though employed in the electrolysis, does not become a part of the machinery was not rebutted. Moreover, even if mercury were treated as a part of the machinery, the Explanation to Rule 57A (which specifies excluded categories) does not bring parts of machines, machinery or apparatus within the excluded inputs, as held in Union Carbide (India) Ltd. v. C.C.E. Consequently mercury used as cathode qualifies as an input and is eligible for CENVAT credit under Rule 57A.The finding that mercury used as cathode is an input eligible for credit under Rule 57A is upheld; the departmental appeal is dismissed.Final Conclusion: The appeal is dismissed; the tribunal upholds the Collector (Appeals)'s conclusion that mercury used as cathode in electrolysis for caustic soda manufacture is an input under Rule 57A and eligible for CENVAT credit. The appeal dealt with whether mercury used in the electrolysis of brine for caustic soda can be considered an input under Rule 57A. The Collector (Appeals) considered it an input, but the Tribunal disagreed, citing previous decisions. The Tribunal held that even if mercury is part of the machinery, it does not qualify as an input. The appeal was dismissed.