Customs, Excise and Gold Tribunal - Tamil Nadu
Collector Of C. Ex. vs Andhra Sugars Ltd. on 7 May, 1990
Equivalent citations: 1990(50)ELT289(TRI-CHENNAI)
ORDER S. Kalyanam, Member (J)
1. This appeal is filed by the Collector of Central Excise, Guntur and is directed against the order of the Collector of Central Excise (Appeals), Madras dated 31-01-1989 holding that the recovery proceedings of the Department in respect of erroneous credit taken by the respondent during December 1986 are barred by limitation under Section 11A of the Central Excises and Salt Act, 1944 inasmuch as the show cause notice in regard to the same was served on the respondent only on 6-1-1988.
2. Shri K. Narasimhan, the Learned Counsel for the respondent at the outset submitted that the lower appellate authority has not gone into the merits of the issue namely whether Titanium Anodes, being a consumable item used in or in relation to the manufacture of Caustic soda/Caustic potash in the electrolysis process, should be treated as input within the meaning of Notification No. 177/86 dated 1-3-1986 and consequently whether the respondent would be entitled to the relief of the same. The learned Counsel urged that this issue has been decided by a Bench ruling of this Tribunal in E/A. No. 183/89-MAS in the case of Travancore Cochin Chemicals Ltd. v. Collector of Central Excise, Cochin, in Order No. 302/90 dated 04-04-1990. The Learned Counsel further urged that the same lower appellate authority in another appeal disposed of by him in order dated 6-11-1989 of the same respondent has found on merits that Modvat credit would be available in respect of the input in question.
3. Shri P.B. Vedantham, the Learned D.R. appearing for the appellant submitted that the lower appellate authority has not gone on the merits of the issue but decided only on the question of bar of limitation.
4. We have carefully considered the submissions made before us and gone through the records of the ease. The short question that arises for determination in the present appeal is one whether the input in question namely, Titanium Anodes should be construed to be an input and entitled to Modvat credit under the Modvat Rules and whether the finding of the lower appellate authority that the proceedings initiated by the Department are barred on grounds of limitation under Section 11A of the Central Excises and Salt Act, 1944. We would like to note at the outset that the lower appellate authority has not decided the issue on merits and in such circumstances though normally we would be inclined to remit the matter for reconsideration, in view of the fact that the issue has been conclusively decided by a Bench of this Tribunal in M/s. Travancore Cochin Chemicals case under Order No. 302/90 dated 4-4-1990 of the Bench (cited supra) and also having regard to the fact that the very same lower appellate authority has followed the ratio of the West Regional Bench of CEGAT in the case of Gujarat Alkalies Chemicals Ltd. v. Collector of C. Ex., reported in 1989 (41) ELT 424 (Tribunal) held in favour of the very same respondent in respect of an identical input in question, we do not think a remand is called for and the, matter may be disposed of on merits as well. The South Regional Bench of the Tribunal in the case of Travancore Cochin Chemicals at the relevant portion with reference to the eligibility of Modvat credit in respect of Titanium Anodes has held as under :-
"4. We observe that in view of the decision of this Bench in the case of Aluminium sheets, and that of the W.R.B. in the case of Titanium Metal Anodes and also the decision of the Special Bench of the Tribunal in the context of Notification 201/79, the appellants' appeal will have to be allowed. It is observed that the Hon'ble Supreme Court in a recent judgment in the case of CCE v. Eastern Paper Industries, 1989 (43) ELT 201 (SC) - has held as under :-
"...Where any particular process, this Court further emphasised, is so integrally connected with the ultimate production of goods that, but for that process, manufacture or processing of goods would be commercially inexpedient, articles required in that process, would fall within the expression 'in the manufacture of goods'..."
It is observed that the wider meaning is desired to be given to the expression 'used in or in relation to the manufacture' of goods in the context of Rule 57A and in that view of the matter, as held in the decision cited above, we find no reason to depart from the earlier decisions of the Tribunal. We like to stress that this Bench in the case of Cominco Binani Zinc Ltd. v. Collector of Central Excise, Cochin, in Order No. 16/90 dated 2-1-1990, referred to supra, have held as under:
"It is observed that the term 'inputs' used under Rule 57A has a wider import. Aluminium sheets used being not equipment as such and since these participate in the manufacturing process, have to be taken to be covered by the provisions of Rule 57A for grant of Modvat credit. The Hon'ble Supreme Court in the case of J.K. Cotton Mills Co. Ltd. v. S.T.O., reported in AIR 1965 SC 1310 (V C 213) examined the scope of the term goods used 'in the manufacture' in the context of Rule 18 framed in the context of Section 13 of the Central Sales Tax Act, 1956 has held as under :-
"The goods referred to in clause (b) of Sub-section (3) of Section 8, which a registered dealer may purchase shall be goods intended for use by him as raw materials, processing materials, machinery, plant, equipment, tools, stores, spare parts, accessories, fuel or lubricants in the manufacture or processing of goods for sale or in mining or in the generation or distribution of electricity or any other form of power".
In view of the wide amplitude of the words 'in or in relation' to the manufacture of specified finished product under Rule 57A, it can be said in the light of the judgment of the Hon'ble Supreme Court that aluminium sheets are used in relation to the manufacture of the goods which are specified products covered by the notification issued under Rule 57A of the C. E. Rules. This Tribunal in the case of Graphite Anodes has also held that Modvat credit is admissible for the same as inputs."
In view of the above, the appeal is allowed."
The West Regional Bench in the case of Gujarat Alkalies Chemicals Ltd. v. Collector of Central Excise (cited supra) has also held as under:-
"But the question raised in the Department's appeal is not on this ground but to deny the credit for the entire titanium anodes. For the reasons stated and discussed earlier, we are of the view, that titanium anode is not sought to be excluded under the explanation to Rule 57A. Hence the duty paid on entire anodes is eligible for Modvat credit. While taking this view, we also find support in the citation made by Shri Mehta in the case of Collr. of C. Ex., Indore v. Gwalior Rayon Silk Manufacturing (Wvg.) Co. Ltd., reported in 1988 (35) ELT 227 (Tri.). In this case, the item covered is the same one and usage also is for manufacture of caustic soda-lye. The decision is with regard to the Notification No. 201/79-C.E. where benefit is given in respect of duty paid inputs used in the manufacture as raw material or components. In the case of Modvat credit, no such restriction of usage as raw material or components is prescribed. Even use in relation to manufacture is permissible so long as it does not get excluded by the explanation. Even in a restricted context under Notification 201/79-C.E., the Special Bench has taken the view that this item can be regarded as input and is eligible for exemption under Notification 201/79. Hence we are fortified that in the liberalised context of Modvat Rules without restriction of usage as raw material or component, there is no jurisdiction for denying the Modvat credit in regard to this item. Accordingly, while allowing the appeal filed by M/s. Gujarat Alkalies and Chemicals Ltd., we dismiss the appeal filed by the Collector of Central Excise, Vadodara."
5. Therefore, on the basis of the ratio of the aforesaid rulings we hold that the input in question with which we are concerned in this case, would be eligible for Modvat credit under the Modvat Rules. Since on merits we find that the input is entitled to Modvat credit, we do not feel called upon to go into the question with reference to the applicability of bar of limitation. In this view of the matter we dismiss the appeal of the Department and allow the cross-objection. Ordered accordingly.