TMI Blog1991 (6) TMI 158X X X X Extracts X X X X X X X X Extracts X X X X ..... respect of Titanium metal anodes. The other three appeals listed at S. Nos. 2 to 4 above have been filed by Collector of Central Excise, Baroda against the common order of the Collector (Appeals) bearing No. 208/90 dated 16-4-1990, under which he allowed the three appeals of the respondents, thereby holding that duty paid on graphite anodes used in the electrolytic cell for manufacture of caustic soda is eligible for modvat credit. 3. Heard the elaborate arguments of Shri Mondal, the ld. S.D.R., on behalf of both the Collectors. At the outset, he was fair enough to concede that this Bench as well as the South Regional Bench have held that Titanium metal anodes are eligible inputs for modvat credit. Even the reference application brought forth by the Department was dismissed by this Bench. He also agreed that in the case of graphite electrodes, the Board themselves have clarified that they, being consumables, are eligible for modvat credit. However, certain aspects, which should have been looked into by the Bench, as is reflected from the subsequent decisions in similar cases, appear to have been missed by the Bench, while deciding the issue in favour of the assessees in the earl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cheme of Modvat, the principles laid down for applying Rule 57A have been set out by the Bench, he pointed out that the Tribunal has taken note of the fact that there are many items - such as Rubber blankets, Conveyor Belting, lithographic plates, which are functionally identifiable as part of the machine and such items have been held to be not eligible for Modvat Credit, even though they get consumed either after one use or after repeated usage. Likewise, the Tribunal has observed that materials such as refractories, ramming mass etc. go as constructional materials in the furnace and they are to be replaced often for the upkeep and maintenance of the furnace. Hence they cannot be held to be used in or in relation to the manufacture of. The Tribunal in the above ease rightly observed thus - The question to be looked into, is not whether they get consumed or otherwise. The question is whether they function as a part of the machine for the intended purpose for the functioning of the machine. If the answer is Yes , they cannot be input eligible for modvat benefit. Applying the same criterion, in this case, either graphite electrode (anode) or Titanium metal anode, which funct ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ting to Titanium metal anode, the admitted position before us from both the sides was, that while graphite anodes are eligible for modvat credit, titanium metal anode is not entitled. The Department s objection then was that titanium metal anode, though performing the same function as graphite anodes, is of more durable nature and is not consumed as graphite anode and hence is not a consumable. It is a plant item. We rejected this contention on the ground that Rule 57A does not talk of raw materials or components or consumable. It refers to goods used in or in relation to the manufacture of final product . Hence, when graphite electrode performing an identical function has been held to be an eligible input by the Department, Titanium metal anode, which is reported to be a better substitute, cannot be denied only on the ground that it does not get consumed as quickly as graphite electrode. Such a distinction cannot be drawn from the Rule 57A. Now, the eligibility for graphite electrode also (in the three appeals before us) has been challenged by the Department. In view of shift in the Department s stand, it has become necessary for us to consider all the elaborate arguments of Shri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tax incidence, such a step is not required to be encouraged. Moreover, the Board also draw the legal powers for issuing such instructions for purposes of ensuring uniformity. Hence, we Would be well justified in rejecting such a contention; all the same since we deal with a quasi-judicial order of the lower authority, where the binding nature of the executive clarification is debatable and the adjudicating authority is to take an independent view based on the legal provision, we propose to consider the other arguments of Shri Mondal on merits. 7.2 Despite repetition, we are to observe that the question to be looked into, in the context of Rule 57A, is not the one whether it is consumed wholly or partly or the longer duration for repeated usage or whether it is consumable or otherwise. The first pertinent question to be raised is whether the item claimed as input is used in or in relation to the manufacture of final product. If the answer is yes , the next question is whether both namely the item claimed as input and the final product where it is claimed to be used, are notified under modvat scheme. If they are so notified, they become eligible for modvat credit subject to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the case of Poysha Industrial Ltd. (Order No. 179-180 dated 22-2-1991). We find that in that case considered by us, the items involved were rubber blankets and lithographic plates -claimed by the manufacturers to be components in relation to metal containers. We held that these items are components of printing machinery and they go with the functioning of printing machinery. They are the components for doing the physical and mechanical process of printing on the metal sheets. Lithographic plate acts as printing media and rubber blanket as transfer media and hence are components of the machine. Here electrodes, though are terminals, do not stop with mere conducting electricity but directly participates in the electrolysis process and chemical reaction inducted over the electrolytic solution resulting in production of caustic soda. The technical and factual position in the two cases are distinguishable. Even going by the principle laid down in our aforesaid judgment, functionality the electrode in this case can be held to be a direct input in the electrolysis process, which results in production of the final product by chemical reaction. Hence, it cannot be treated en par with a p ..... X X X X Extracts X X X X X X X X Extracts X X X X
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