2023 (7) TMI 947 - AT - Central Excise

Titanium Cathodes Eligible for Credit in Manufacturing Processes: CESTAT Decision

The Appellate Tribunal CESTAT CHENNAI ruled that Titanium Cathodes used in the manufacturing process of Caustic Soda Lye and Liquid Chlorine are eligible ... CENVAT Credit - Inputs - Titanium Coated Cathodes - Department was of the view that the coated cathodes having been used only as part of an equipment is not eligible for credit as ‘inputs’ - manufacture of Caustic Soda Lye and Liquid Chlorine - HELD THAT:- The Tribunal in the case of COLLECTOR OF C. EX. VERSUS METTUR CHEMICALS & INDUSTRIALS [1990 (12) TMI 243 - CEGAT, MADRAS] held that cathodes used in the electrolytic process being incidentally consumed in the manufacture of caustic soda is an ‘input’ as defined under erstwhile Rule 57A of Central Excise Rules, 1944 and eligible for modvat credit. The revision application filed by the department against this decision of the Tribunal was dismissed by the Tribunal vide Final Order No.170/1995 and the order has been accepted by the Department. In the case of COLLECTOR OF CENTRAL EXCISE, INDORE VERSUS GWALIOR RAYON SILK MFG. (WVG.) CO. LTD. [1988 (2) TMI 210 - CEGAT, NEW DELHI] it was categorically held that electrodes takes part in the manufacturing process and though no doubt that electrodes did not enter the stream of manufacture as raw materials, they are eligible for credit. There are no grounds to deviate from the view taken by the Commissioner (Appeals) - appeal of Revenue dismissed. Issues:The issue involved is whether Titanium Cathodes used in the manufacture of Caustic Soda Lye and Liquid Chlorine are eligible for credit as 'inputs'.Issue 1: Eligibility of Titanium Cathodes for CreditThe respondents claimed modvat credit on Coated Cathodes used in the manufacturing process. The Department argued that the cathodes were not eligible for credit as they were not consumed in the manufacturing process, citing a circular. The respondent relied on previous Tribunal decisions and a Supreme Court case to support their claim for credit. The Tribunal considered past decisions and upheld the view that cathodes used in the electrolytic process are eligible for credit as inputs. The Department's appeal was dismissed as lacking merit.In conclusion, the judgment by the Appellate Tribunal CESTAT CHENNAI addressed the issue of whether Titanium Cathodes used in the manufacturing process are eligible for credit as 'inputs'. The Tribunal relied on past decisions to support the eligibility of cathodes for credit, dismissing the Department's appeal for lacking merit.