TMI Blog1993 (11) TMI 162X X X X Extracts X X X X X X X X Extracts X X X X ..... aurashtra Chemicals - the Chemical Division of M/s Jiyajeerao Cotton Mills, Gwalior and hence both the appeals relate to the same manufacturing unit. 2.2 Though a minor issue relating to taking of credit on gate passes not duly endorsed is involved in one appeal, Shri K.K. Kapoor does not press for a decision on that issue. The main issue urged before us is the eligibility of Modvat credit in respect of the following items namely - Hydrochloric acid, Sulphuric Acid, Caustic soda lye and flakes and synthetic resins declared to be inputs used as chemicals for demineralisation of water, before it is pumped into boilers for production of steam, which, in turn, is used in various processes for manufacture of soda ash, sodium bicarbonate and ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and for heating purposes. The steam does not find any direct application in the manufacturing process of the final product. Hence even if these inputs are used for getting steam, that steam cannot be said to have been used in or in relation to the manufacture of final products. In the above view, the lower authorities have disallowed the Modvat credit and ordered reversal of credit availed of in respect of these four inputs. The present appeals are against the above decision. 3. Shri K.K. Kapoor, the ld. consultant mainly urged the following propositions : (i) There is no dispute that these chemicals are used for demineralising water for obtaining steam. Steam is only an intermediate product, which is exempted. Hence benefit of Rule ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in, the Ld. J.D.R. lays emphasis on the following position : (i) These items are necessary only for purification of water so that scales are not formed in the boiler, while such water is heated for generating steam. (ii) In any case, part of the steam goes into turbine meant only for power generation. The electric power generated is used for running the machines as a motive power. It cannot be said to be an input used in the manufacture of final product. (iii) As per the instructions received from the Collector, steam generated is partly consumed in the turbine to produce electricity and part is sent for other processes, but the percentage of such steam utilised for other processes is not ascertainable. (iv) Unlike the case of Sesha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s along with other part of steam, which goes for usage in various processes such as distillation, filteration, absorption etc. 5. From the above factual position, it would appear to us that steam generation, which gets into turbine for power generation is mainly used up in the process of power generation, and only exhaust steam, instead of being vented but, gets into the stream along with other part of the steam and goes through the various stages of processes. As seen from the book titled the Efficient use of Steam , in the Chapter XXII relating to generation of power for ammonia soda plants, it is observed as below :- The requirement in generation of power for ammonia soda manufacture are not in any way fundamentally different from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h the ultimate production of goods, they should get this benefit. But in the case of chemicals used in generation of steam, which gets into turbine for power generation, they cannot be said to be having a nexus with the processes connected with the ultimate production of the final products. They are connected with power generation for running the machinery and providing lighting. Exhaust steam instead of being vented out, is put into the stream. The exhaust steam is already a spent steam and it has already been used for the purpose of power generation. But then, it is reported by the Dept. that percentage of steam going for power generation cannot be determined. This aspect has to be gone into by the authorities in consultation with the Che ..... X X X X Extracts X X X X X X X X Extracts X X X X
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