Custom, Excise & Service Tax Tribunal
Pondicherry vs Chemfab Alkalies Ltd on 24 July, 2023
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE
TRIBUNAL,
SOUTH ZONAL BENCH, CHENNAI
COURT HALL No.III
EXCISE APPEAL No. 40446 OF 2014
(Arising out of Order-in-Original No.24/2013 (C) dated 30.10.2013 passed by
Commissioner of Central Excise, No.1, Goubert Avenue, Puducherry- 605 001)
The Commissioner of GST & Central Excise .... Appellant
No. 1, Goubert Avenue, Beach Road,
Puducherry 605 001
Versus
M/s.Chemfab Alkalies Ltd. ...Respondent
Gnanananda Place, Kalapet,
Puducherry 605 014.
APPEARANCE :
Mr. R. Rajaraman, Assistant Commissioner (A.R)
For the Appellant
Mr. S. Sankaravadivelu, Advocate
For the Respondent
CORAM :
HON'BLE MS. SULEKHA BEEVI C.S., MEMBER (JUDICIAL)
HON'BLE MR. VASA SESHAGIRI RAO, MEMBER (TECHNICAL)
DATE OF HEARING : 20.07.2023
DATE OF DECISION :24.07.2023
FINAL ORDER No.40609/2023
ORDER :Per Ms. SULEKHA BEEVI, C.S. Brief facts are that the respondents are engaged in the manufacture of Caustic Soda Lye falling under Chapter sub heading 281500 and Liquid Chlorine falling under Chapter sub heading 280100 2 Excise Appeal No. 40446 of 2014 of the CETA, 1985 as it existed during the material time. During the course of manufacture of Caustic Soda Lye and Liquid Chlorine, the Sodium Chloride solution was electrolyzed in an appliance by using Titanium Coated Cathodes (as cathode) falling under Chapter sub heading 854800 of the CETA. The coated cathodes were declared by the respondent as an input for availing modvat credit under Rule 57 of the erstwhile Central Excise Rules, 1944. 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'. Show cause notices were issued for the different periods proposing to deny the credit and recover the same along with interest and for imposing penalty. After due process of law, the original authority held that inputs include items also used in relation to the manufacture of final products and therefore the cathodes are eligible for credit. Proceedings were dropped by the Commissioner. Hence the department is now before the Tribunal.
2. Ld. A.R Sri R. Rajaraman appeared and argued for the Department. It is submitted by the Ld. A.R that adjudicating authority has erroneously held that coated cathodes were used in relation to manufacture of caustic soda and therefore would be eligible for credit as inputs. Board vide circular No.7/90-Cx 8 dt. 09.02.1990 while deciding the admissibility of modvat credit on the anodes/cathodes used in the manufacture of zinc has clarified that said anodes / cathodes are not known to take part in the manufacture of zinc and do not get consumed; that therefore modvat credit should not be permitted on the anodes & cathodes used in the electrolytic process of 3 Excise Appeal No. 40446 of 2014 metallurgical extraction of zinc. The Commissioner ought to have considered the said circular and denied the credit. Ld. A.R prayed that the appeal may be allowed.
3. Ld. Counsel Sri S. Sankaravadivelu appeared and argued for the respondent. He submitted that the respondent has claimed modvat credit of the duty paid on Coated Cathodes Nickel Bipolar Cathodes and Titanium Bipolar Cathodes used in the manufacture of Caustic Soda Lye / Chlorine under Rule 57G of the erstwhile Central Excise Rules, 1944. The issue as to whether the credit is eligible on Cathodes as inputs used in relation to manufacture is settled by the decision of the Tribunal in the case of Collector of Central Excise Vs Meetur Chemical & Industrials - 1991 (56) ELT 465 (Tri.) and Collector of Central Excise, Allahabad Vs Kanoria Chemicals & Industries - 1997 (96) ELT 585 (Tri.). The Larger Bench of the Tribunal in the case of Union Carbide India Ltd. Vs CCE Calcutta - 1996 (86) ELT 613 (Tri.) had occasion to consider a similar issue and after referring to the decision of the Hon'ble Supreme Court in the case of Collector of Central Excise Vs Ballarpur Industries Ltd. - 1989 (43) ELT 804 (SC) held that credit is eligible. Ld. Counsel prayed that the appeal may be dismissed.
4. Heard both sides.
5. The issue that arises for consideration is whether the Titanium Cathodes used in the course of manufacture of Caustic Soda Lye and Liquid Chlorine is eligible for credit as 'inputs'. The Tribunal in the case of Collector of Central Excise Vs Meetur Chemical & Industrials (supra) held that cathodes used in the electrolytic process being incidentally 4 Excise Appeal No. 40446 of 2014 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. Similarly, reference application was filed in the case of CCE Vs Modi Alkalies & Chemicals Ltd. - 1994 (74) ELT 966 (Tri.) and in the case of CCE Vs Kanoria Chemicals & Industries (supra). The appeals filed by the department against such decisions were also dismissed. In the case of Gwalior Rayon Silk Mfg. (Wvg.) Co. Ltd. - 1988 (35) ELT 227 (T) 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. This decision of the Tribunal was upheld by the Apex Court as reported in 1992 (59) ELT A77 (SC). The decision of the Tribunal rendered in Gwalior Rayon Silk Mfg. (Wvg.) Co. Ltd (supra) has been relied in various other cases to hold that anodes/cathodes used in the electrolytic process is eligible for credit as inputs. We do not find any grounds to deviate from the view taken by the Commissioner (Appeals). The Department's appeal is devoid of merits. The same is dismissed.
(Pronounced in court on 24.07.2023)
sd/- sd/-
(VASA SESHAGIRI RAO) (SULEKHA BEEVI C.S.)
Member (Technical) Member (Judicial)
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