TaxTMI 
TaxTMI 
1998 (6) TMI 266
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....l has held in a number of cases that the inputs which are used for the purpose of maintenance of the equipment, the same would not be eligible for the benefit of Modvat credit. In view of the above, we hold that the plea of appellants cannot be accepted. (2) Sulphuric Acid The learned Consultant has referred us to the use as stated in the notes submitted. The use of the sulphuric acid is for treatment of water which is used in the cooling system and not as an inprocess material. Cooling system is an equipment and the water used is to make this functional. Heard the learned DR. In that view of the matter, the use cannot be held to be in or in relation to the manufacture of the declared product, namely cement. Hence, the plea of the appellants cannot be accepted in this regard. (3) Hydrochloric Acid/Caustic Soda The use is for regeneration of the resins which is a separate activity. The resins by themselves which participate in the process leading to the generation of power to be used in the plant may have a case for being considered as an input as the process of regeneration of the same is for the start of the manufacturing process.    H....
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....s treatment has been done at a stage anterior to the start of the manufacturing process for generation of steam and its use therefore can be taken to be for treatment of water for making the water ready for use in the process of manufacture of paper. In the case of Andhra Pradesh Paper Mills Ltd. v. C.C.E., reported in 1990 (50) E.L.T. 252, this Bench of the Tribunal has held as under :    "It is thus seen that the Hon'ble Supreme Court has held that so long as it can be shown that the materials used as inputs have a nexus with the process which is integrally connected with the ultimate production of goods till the same are fit for being put in the marketing stream and such process is so integrally connected with ultimate production of goods that it would be commercially inexpedient to produce the finished goods without that process, all such inputs would get the benefit of credit of duty. It is observed that the stress is on the process which are integrally connected with the production of the goods. Therefore, for the items to pass the test of eligibility to the benefit of the Modvat credit will be such that they participate in the process of manufacture without....
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....r making the end product ready or marketing. The use of the materials has to be such that they carry by their participation, in the manufacturing stream the process of manufacture a step further." (4) Paints (Anti coating) Admittedly, the use is for protection of the equipment and the use has to be held to be for maintenance of the equipment. When these inputs at the relevant time were not being considered as an eligible input for the benefit of Modvat credit, the question of therefore treating the paints as an input would not arise. (5) Branding Inks The ink is used for marking in the bags and the use is for making the goods ready for marketing. It has been held by the Hon'ble Supreme Court that materials or items used to make the finished product marketable have to be held to used in or in relation to the manufacture of the finished product. We, therefore, hold that Modvat credit in respect of this item has to be allowed. (6) Pentolite Booster The learned Counsel pleaded that the lower authority has ruled in favour of the assessee and therefore, no order is required to be passed in regard to this item. (7) Refractory cement, Fire Bricks/Re....
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....and process of manufacture of final product (caustic soda etc.) does not come to a stand still. Also since it maintains the solution at particular temperature to enable chemical reaction to take place, has been granted the benefit of Modvat in the case of Gujarat Alkalies and Chemicals Ltd. v. Collector of Central Excise (supra). (c)  Acetylene and Oxygen gases used for cutting scraps before they are fed into furnace for melting, has been considered as eligible inputs for benefit of Modvat credit as in the case of Collector of Central Excise v. Brindavan Alloys Ltd. as reported in 1994 (69) E.L.T. 764. (d)  Nitrogen gas used to create inert atmosphere in relation to the manufacture of MMM Monomer has been held to be eligible input for grant of Modvat credit, 1994 (69) E.L.T. 698. (e)  Oxygen gas being used to generate high temperature of process of sealing of electronic gun on to glass shell for transmission of electron to TV screens has been considered as an input and held to be eligible for Modvat credit in the case of Samtel India Ltd. v. Collector of Central Excise as reported in 1994 (71) E.L.T. 737. (f)  Hydro....
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.... is not possible to generate power without demineralisation of water and accordingly the process of manufacture of cement will not proceed." I agree for grant of benefit in the light of the judgment cited by my learned Brother in his order and also in the light of the judgments noted by me supra. 4. Paints (Anti Coating) The write up states as follows :- "In all the mills, the draft through the mill is created by induced draft fans. The gases carry along with it fine dust, which passes through these fans. Due to moisture content in the raw material being ground, this dust forms a coating on the fans leading to severe vibrations and loss in efficiency. This paint is used as a coating on the fan impeller which does not allow the dust to settle, thus avoids vibration and loss of efficiency." I agree with my learned Brother for denying the benefit of Modvat credit, in the light of the reasoning given by them. 5. Branding Inks The write up states as follows :- "The marking on bag used for packing of cement is a statutory requirement as per the format approved by the Bureau of Indian Standards which include the name and full address of the manufacturer, ....
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.... in cement machineries for speed variation in order to control the process of cement manufacturing. Thus is it utmost necessary in having this equipment for the manufacture of cement. Wire & Cables These are used for carrying current to various machineries from the control room or the load centre. Thus, these are used for controlling the prime movers. Electrical Insulators These are used in conjunction with wires, cables and conductors for carrying current and voltages to the desired machinery. Electrical parts of machinery The various parts such as : (1) Breakers  (2) Transformers  (3) Starters (4) MCB's (Moulded Circuit Breakers)  (5) Protective relays These are used for controlling the current and voltage which are feeding to various sub-stations and machineries to control the voltages and current as per the requirement of the cement machinery and inturn the process." (i) Refractory Cement Mortars and similar compositions In the case of Collector of Central Excise v. Raipur Alloy Steel Ltd. - 1995 (78) E.L.T. 44, the Tribunal by majority has held Dead burnt magnesite being a chemical use....
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....Peeran) Member (J) 4.In view of difference of opinion between the  Members, the following questions arises for determination by the Third Member. Whether the appellants are entitled for the Modvat credit or  i. not in respect of the following items. Oxygen in Cylinder/Dissolved Acetylene (i) Sulphuric Acid (ii) Sd/-  Sd/-  (S.L. Peeran) (V.P. Gulati) Member (J) Member (T) 5. [Order per : V.K. Ashtana, Member (T)]. - In this appeal, there has arisen a difference of opinion between Hon'ble Member Shri V.P. Gulati (since retired) and Hon'ble Member (J), Shri S.L. Peeran. A reference thereon to the undersigned lies for consideration on the following :- i.   Whether the appellants are entitled for the Modvat credit or not in respect of the following items. (i) Oxygen in Cylinder/Dissolved Acetylene (ii) Sulphuric Acid 6. Heard learned Consultant Shri C. Chidambaram. He cited decisions in his favour as follows :- (i)  Union Carbide (I) - 1996 (80) E.L.T. 613 (ii)  Saurashtra Chemicals - 1995 (80) E.L.T.....
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....Therefore, I find that this welding activity has a direct nexus with the manufacturing process and hence these gases would be eligible for Modvat credit. 13. As regards Sulphuric Acid, I again humbly concur with the opinion of Hon'ble Member (J) in view of the case-laws discussed by him. It is further found that if Fuel Oil for Boiler for steam generation (used for heating etc. i.e., energy) is allowable as `input', then this chemical for treating water which is essential for generation of electricity i.e. energy should also be treated on same footing. I also find that this use is before the emergence of the final product as distinct from use of Sulphuric/Hydrochloric Acid in effluent treatment plants, where for ecological considerations, effluent obtained during/after production of final product, is to be treated, before discharge. In the latter case a view can be taken that since this is an activity undertaken after the final product has already come into existence, therefore, credit is not allowed being not in relation thereto. In the instant case, a wider view is necessary encompassing the entire manufacturing process. Sulphuric Acid is necessary to captively produce el....