Modvat credit on caustic potash flakes, used in the manufacture of Linear Alky Benzene - Central Excise - 16/90-CX.8

Modvat credit on caustic potash flakes, used in the manufacture of Linear Alky Benzene Circular No. 16/90-CX.8 Dated 22-3-1990 [From F. No. 261/28/1/90-CX.8] Government of India Central Board of Excise Customs New Delhi Subject : Admissibility of Modvat Credit on Caustic Potash flakes, used in the manufacture of Linear Alky Benzene - regarding. I am directed to say that doubts have arisen whether Modvat credit can be permitted on the caustic potash flakes, used in the manufacture of Linear Alky Benzene (LAB). It is reported that hydrofluoric acid is used as a catalyst by units manufacturing Linear Alky Benzene. During the process of manufacture, hydrogen fluoride is produced, whose toxic nature has to be neutralised in a chamber in the presence of caustic potash flakes before it is allowed to be let out. The units contend that Modvat credit of duty paid on caustic potash should be permitted as, they can not dispose of hydrogen fluoride without neutralising the same. AG's audit is, however, of the view that modvat credit of duty paid on caustic potash cannot be availed as it is not used in or in relation to the manufacture of LAB. The matter has been examined by the Board. It appears that the contention of the CERA is correct. Caustic Potash flakes cannot by any stretch of imagination be said to have been used in or in relation to the manufacture of LAB. It is used as a neutraliser of Hydrogen Fluoride, a by product, and is not used as an input for manufacture of LAB. Therefore, Modvat credit can not be permitted on the same. The practice of permitting Modvat Credit on caustic potash flakes, if any, may be discontinued forthwith. Action may also be taken to recover the credit if already permitted in your Collectorate. The trade and the field formations may be advised suitably. Receipt of this letter may please be acknowledged.