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of <h1>Appeal allows MODVAT credit for acetylene gas, flourspar; rejects credit for refractory ramming mass, fireclay</h1> <h3>MUKUND IRON AND STEEL WORKS LTD. Versus COLLECTOR OF CENTRAL EXCISE</h3> The appeal was allowed for acetylene gas and flourspar, deeming them eligible for MODVAT credit as they are integral to the manufacturing process. ... MODVAT Credit Issues Involved:1. Eligibility of MODVAT credit for refractory ramming mass and fireclay.2. Eligibility of MODVAT credit for acetylene gas.3. Eligibility of MODVAT credit for binders (foundry chemicals) for preparation of cores.4. Eligibility of MODVAT credit for sleeves and graphite stopper head.5. Eligibility of MODVAT credit for flourspar.Summary:I. Refractory Ramming Mass and Fireclay:The appellants conceded that refractory materials used in lining furnaces are not eligible for MODVAT credit as per the previous decision in order No. 617/89 dated 4-7-1989. The same rationale applies to ramming mass and fireclay, which are used for lining furnaces and ladles for heat resistance. Therefore, the demands denying MODVAT credit on these inputs are sustainable.II. Acetylene Gas:Acetylene gas, used in combination with oxygen gas for removing excess material from castings, was argued to be an input used in or in relation to the manufacture of castings. The tribunal agreed that acetylene gas is used in the manufacturing process and is not a tool by itself. It is a consumable gas required for producing a high-temperature flame necessary for the manufacture of the final product. Therefore, MODVAT credit is required to be extended for acetylene gas.III. Binders (Foundry Chemicals) for Preparation of Cores:Binders used in the preparation of sand moulds, which are essential for the manufacture of castings, were argued to be intermediate goods. However, the tribunal held that sand moulds are in the nature of equipment or apparatus used for castings and are not eligible for MODVAT credit. The demands denying MODVAT credit for these inputs are sustainable.IV. Sleeves and Graphite Stopper Head:Sleeves and graphite stopper heads, used in moulds and ladles, were argued to be consumables. The tribunal held that these items are fittings in equipment or apparatus and are not eligible for MODVAT credit. Therefore, MODVAT benefit is not admissible for these inputs.V. Flourspar:Both parties agreed that flourspar, used to remove impurities during the manufacturing process, is an input that goes into the product mix. The tribunal observed that flourspar is directly involved in the manufacturing process and cannot be denied MODVAT benefit.Conclusion:The appeal is allowed for acetylene gas and flourspar, holding them as eligible inputs for MODVAT credit. The appeal is rejected for refractory ramming mass, fireclay, binders, sleeves, and graphite stopper head, denying MODVAT credit for these inputs.
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