Customs, Excise and Gold Tribunal - Delhi
Melton India Ltd. vs Commissioner Of Central Excise on 26 September, 2000
Equivalent citations: 2000(121)ELT701(TRI-DEL)
ORDER S.S. Kang, Member (J)
1. The following question is referred to the Larger Bench:
"Whether Modvat credit of duty paid on (1) Ceramic Evaporation Boats and (2) Boron Nitrate Suspension, utilised in manufacture of metallised plastic film is admissible under Rule 57A as inputs?"
2. M/s. Melton India Ltd. are engaged in the manufacture of Metallised Polyester and other plastic films. As per the appellants in the process of Metallising the polyester films, refractory ceramic evaporation boats are used for evaporating the aluminium wire and also Boron Nitrate suspension is used as coating material over the boat section. The process of vacuum metallising, as explained by the appellants, is undertaken in the vacuum chamber of the met-alliser where the plastic film is coated with an even or uniform layer of aluminium. The ceramic evaporation boats are used for the reason that they are having the property of resisting the temperature upto 1500 degree C under vacuum. The plastic rolls are loaded from one side of the vacuum chamber and the aluminium wire is continuously fed in from the other side to the evaporation boat where it is vapourised and evaporated. The thermal, mechanical and electrical conditions require the ceramic product which precisely meets the demand of this kind of application. The evaporator boats used by the appellants fulfil these requirements. After metallising, certain quantity of films, ceramic evaporator boats are to be replaced. The Boron Nitrate suspension is used as coating material over the boat section so that the vapourised aluminium does not stick over the boat. The contention of the appellants is that the evaporation boats and Boron Nitrate suspension are in the nature of consumables and without these items, it is not possible to metallise the polyester film, hence are inputs under Rule 57A of the Central Excise Rules.
3. The appellants relied upon the following decisions :
1. 1996 (86) E.L.T. 669 (Rexor India Ltd. v. C.C.E.);
2. 1998 (99) E.L.T. 79 (India Coffee & Tea Distributing Co. v. C.C.E.);
3. 1998 (99) E.L.T. 498 (K.P. Minerals Pvt. Ltd. v. C.C.E.);
4. 1998 (96) E.L.T. 323 (Goetze India Ltd. v. C.C.E.);
5. 1996 (86) E.L.T. 613 (Union Carbide India Ltd. v. C.C.E.); and
6. 1999 (31) RLT 800 (Pat.) (C.C.E., Patna v. TELCO).
4. The contention of the appellants is that in the above decisions, the benefit of Modvat credit in respect of graphite boats used as containers and parts of machines were held to be inputs under rule 57A of the Central Excise Rules. The Larger Bench of the Tribunal in the case of Union Carbide India Ltd. (supra) held that parts of machine are entitled for the benefit of credit under Rule 57A of the Rules, ld. Counsel, further, submits that the Larger Bench decision in the case of Union Carbide India v. C.C.E. was upheld by the Hon'ble Patna High Court in the case of C.C.E. v. TELCO (supra). The ld. Counsel also relies upon the decisions of the Tribunal in the case of Kalyani Steels Ltd. v. C.C.E., Pune reported in 1998 (99) E.L.T. 620 and in the case of Madhya Pradesh Iron & Steel Co. v C.C.E. reported in 1998 (29) RLT 696 and held that refractories and refractory material was also held to be inputs as input.
5. The Revenue relied upon the decisions of the Tribunal in the case of Madhya Pradesh Polypropylene Ltd. v. C.C.E. reported in 1996 (88) E.L.T. 730 and in the case of Jalpac India Ltd. v C.C.E. reported in 1997 (96) E.L.T. 554 to say that evaporation boats are not inputs.
6. Heard both sides.
7. The contention of the appellants is that Boron Nitrate suspension and ceramic evaporation boats are in the nature of consumables and therefore, are inputs used in or in relation to the manufacture of metallised polyester films. The Boron Nitrate suspension is used for coating evaporation boats so that the vapourised aluminium does not stick over the boats section and this Boron Nitrate suspension is being consumed during this process. We find that the Larger Bench of the Tribunal in the case of Ramakrishna Steel Industries v. C.C.E. reported in 1996 (82) E.L.T. 575 held that where the raw material is used in the stream for manufacture of final product, that raw material certainly is an input used in the manufacture of final product. Rule 57A of the Central Excise Rules provides that credit is admissible on the inputs used in or in relation to the manufacture of final product. The lower authorities in respect Boron Nitrate suspension held that it in the form of equipment and though not directly used for producing or processing of goods but may be considered as equipment used in relation to the manufacture of final product. We find that the revenue is not questioning the use of this Boron Nitrate suspension in the manufacture of metallised polyester film as explained by the appellants. As the Boron Nitrate suspension is used as quoting material over boats so that the vapourised aluminium does not stick over the boats and got consumed during this process. Hence Boron Nitrate suspension clearly participates in the manufacturing process and will be eligible as an input used in the manufacture of final product.
8. In respect of ceramic evaporation boats, the contention of the appellants is that these boats are used in the manufacture of films as they are having property of resisting the high temperature under vacuum and aluminium wire is continuously fed to the boat where it is vapourised and evaporated. The appellants are not considering the ceramic evaporation boat as part of vacuum chamber, therefore, the ratio of the Larger Bench decision in the case of Union Carbide India Ltd. (supra) is not applicable to the facts of the present case as the Larger Bench of the Tribunal in this case held that parts of machines are entitled for the benefit of Modvat credit as inputs under Rule 57A of the Central Excise Rules.
9. The term appliance is not defined in the Act or under the rules. The dictionary meaning of the appliance is as under:
(i) Concise Dictionary - things applied as a means to an end; utensil, device, equipment;
(ii) Websters Dictionary - piece of appliance equipment for adapting a tool or machine to special purpose; attachment, instrument or device designed for particular use.
(iii) Academic Dictionary of Science and Technology - appliance is in general, any tool or machine that is used to carry out a specific task or to produce desired result.
10. As per use, as explained by the appellants, the evaporation can only be treated as appliances, which is used to carry out a specific task or to produce desired result in the manufacture of final product.
11. In view of above discussion the ceramic evaporation boats used in the manufacture of metallised polyester films are appliance and cannot be treated as inputs used in or in relation to the manufacture of final product. Hence ceramic evaporation boats are not entitled for the benefit of Modvat credit as input under rule 57 A of the Central Excise Rules when these are used in the manufacture of metallised polyester films. In view of the above discussion, we uphold the view taken by the Tribunal in the case of Madhya Pradesh Polypropylene Ltd. v. C.C.E. reported in 1996 (88) E.LT. 730 and in the case of Jalpac India Limited v. C.C.E. reported in 1997 (96) E.L.T. 554 and hold that contrary view taken in respect of evaporation boats is not a good law. In view of the above discussion, the question referred to the Larger Bench is answered in the following terms:
"The Modvat credit of duty paid on Boron Nitrate suspension utilised in the manufacture of metallised polyester films is admissible under rule 57A of the Central Excise Rules and the Modvat credit of duty paid on ceramic evaporation boats used in the manufacture of metallised plastic films is not admissible as input under Rule 57 A of the Central Excise Rules."
12. The matter be now posted before the appropriate Bench for regular hearing.