ORDER
S.K. Bhatnagar, Vice President
1. This is an appeal against the order of Collector (Appeals), Ghaziabad dated 29-1-1993.
2. Ld. Counsel stated that the appellants are manufacturers of carbon black and had filed a declaration under Rule 57B for availing MODVAT credit of duty paid on inputs under Rule 57A in r/o the following materials:-
1. Glass Fibre Filter Bags/Fibre Glass Dust Filter bags. Sub-heading 7014.00
2. Super Refractory (Fired) Sub-heading 6901.00
3. Super Refractory (Cement) Sub-heading 3816.00
The department took the view that the above mentioned materials were not inputs used in the manufacture of final product i.e. carbon black and were hit by the exclusion clause under Rule 57A and therefore no MODVAT was admissible w.r.t. the same.
3. It was his submission that the authorities below have erred in arriving at the above finding.
4. In this connection he would like to draw attention to the flow chart of the process of manufacture filed by them as Annexure I.
5. It was their contention that the carbon black is manufactured out of the feed stock derived from petroleum. It can be seen from the flow chart that the CBFS which is in liquid form is introduced into a high temperature reactor (Furnace) where carbon black is produced by means of thermal cracking of CBFS under closely controlled conditions. The Super Refractories (Fired) are completely used up over a period of time in the working of the reactor and are then replaced. They act as facilitators for the controlled reaction which takes place in the reactor. The Super Refractories (Fired) are in the nature of consumables. Another input which is similar to their one is Super Refractories (Cement). These are also in the nature of consumables which are entirely used up over a period of time in the controlled reaction which takes place in the reactor.
6. The glass fibre filter bags are used to filter the carbon black smoke which arises out of the quench tower to which the heated carbon black is introduced from the reactor. The filter bags, perform the function of filtration and are worn out over a period of time and are replaced. Thus, they play an important role in the manufacture of carbon black.
7. In other words all these items are used in or in relation to the manufacture of final product.
8. In so far as the super refractory (Cement) is concerned, it is classifiable under Heading 38.16. In other words they are one of the miscellaneous chemical products falling under Chapter 38. They are actually in the nature of or analogous to the ramming mass and are made of burnt magnesite which is actually magnesium oxide and therefore has the capacity to resist and withstand high temperature. In support of their contention that they are required to be considered as inputs used in the manufacture and cannot be considered as a part of the furnace or as an equipment are not hit by the exclusion clause, he would like to rely on the Calcutta High Court judgment in the case of Singh Alloys and Steel Ltd. reported in 1993 (66) E.L.T. 594. It was also his submission that the Calcutta High Court judgment in the case of Singh Alloys has been followed by the Tribunal in the case of AB Tools and the larger bench decision in this aspect has been reported in 1994 (71) E.L.T. 776.
9. Their lordships observations in this connection in para 7 of their order is relevant in as much as it is mentioned therein that ramming mass and dolopatch mix have been classified as miscellaneous chemical products under Chapter 38 Heading 3816.00 of the Schedule to the Central Excise Tariff Act, 1985. The items dissolve and seal the crevices in the refractory walls of the furnace to prevent leaking of the liquid metal from the furnace and to reduce the erosion of the refractory lining of the furnace. The items lose their identity and are consumed in the process. Some part of the items remains in the liquid metal which forms the ingot and the balance forms part of the residue or slug.
In the present case the appellants had in their letter dated 21-8-1991 addressed to the AC which was submitted as a letter covering the declaration the function of this item has been described as “used for fixing the refractories in the reactors”.
10. It was his submission that in view of the above position, the case in so far as relates to this item is covered in their favour by the judgment of the Calcutta High Court cited above.
11. As regards super refractories (fired) he would like to file a technical write-up regarding the refractory bricks used during steel making which shows that they get consumed and form part of the liquid steel and slug. This write-up specifically refers to the CaO and MgO of magnesite refractory bricks.
12. It was his submission that in view of this technical write up which should also be held as an input used in the manufacture of the final product namely carbon black in their case and it should be held that it was not hit by the exclusion clause although it was classifiable under a different chapter and heading namely 6901.00.
13. In this connection he would however, like to mention that there is a Tribunal order in the case of Raipur Alloys Steel Ltd. [1995 (78) E.L.T. 441] in which the majority of opinion is against him on the question of refractory bricks; But it was his submission that it is the minority view which was correct and therefore this view may be taken into consideration. The majority view has erred in distinguishing it from the case of Singh Alloys on one hand and on the other hand denying the benefit in spite of their holding that these were parts of the furnace because if these are held to be parts of furnace then there are series of tribunal orders on this point that parts of equipment for machinery are not hit by the exclusion clause and this aspect has not been considered. Therefore, it was his submission that majority order was sub-silentio on this aspect and hence, it is the minority view which should be taken into consideration.
14. It was also his submission that in view of the difference of opinion on the aspect as to whether the parts of machinery equipment etc. were hit by the exclusion clause the issue has been referred to a larger bench whose order is still awaited.
15. As far as the glass bags are concerned, he would like to reiterate that since these are consumables they should be considered as such and the benefit should be allowed.
16. In response to queries from the bench regarding the bags he stated that while no other technical material is readily available at this stage he would like to mention that the filter presses themselves are made of steel. These bags are used in these filter presses so that the smoke could pass through them and thus the material could get filtered. Hence these are not a part of the filter press equipment although used alongwith it.
17. He would also like to submit that a new Rule 57Q was added on 1-3-1994 and this rule allows the benefit of MODVAT even in the case of credit of duty paid on capital goods used by the manufacturer in the factory for the production of specified final products. This Rule 57Q has an explanation which includes in the definition of capital goods “(a) machines, machinery, plant equipment, apparatus, tools or appliances used for producing or processing of any goods or for bringing about any change in any substance for the manufacture of final products; (b) components, spare parts and accessories of the aforesaid machines, machinery, plant, equipment, apparatus, tools or appliances used for aforesaid purpose”. Clause (a) virtually a reproduction of the main principal clause given in 57A. Further more, under the explanation the clause (d) has a sub-clause (x) which specifically refers to “refractories falling within Chapter 69”. It was his contention that if refractory bricks were classifiable as one of the types falling under sub-clause (b) in the sub-clause (d) then there was no need for a separate sub-clause under Clause (d).
18. In response to bench queries the Ld. Counsel very fairly stated that the provision was prospective and not retrospective.
19. The Ld. DR drew attention to the Order-in-original and the Order in-Appeal, and reiterated the findings of the Collector (Appeals).
20. I have considered the above submissions. I observe that the items in question have been declared by the appellants and the declaration filed under Rule 57G for availing the benefit of modvat under Rule 57A indicates their description as well as sub-heading principles. The correctness or otherwise of this description and the sub-headings indicated in this declaration is not in dispute before us.
21. The declaration itself shows that super refractories (Cement) were classifiable under sub-heading 3816.00 and were used for fixing the refractories in the reactos. The appellants have also filed a flow chart showing the process of manufacture and the correctness thereof has also not been disputed before me.
22. The Ld. Counsel’s description of the material and its use has also not been contested, disputed or shown to be wrong. In the circumstances, the Ld. Counsel’s arguments that this item is covered by the ratio of the judgment of the Hon’ble High Court in the case of Singh Alloys (supra) which has been followed in the case of AB Tools also (supra) is evidently correct.
23. Insofar as the question of super refractory bricks (Fired) are con cerned the Ld. Counsel has drawn our attention to the order of the tribunal in the case of Raipur Alloy Steel Ltd. (Supra). He has also very fairly stated that the majority view is against him. His argument that the minority view should be accepted and followed is however, not acceptable because the Tribunal’s order is the order of the majority, and it is this majority view, being Tribunal’s final order which is required to be followed .
24. He has taken the argument that the minority view is based on the Calcutta High Court judgment and the majority has erred in distinguishing it is not acceptable because the majority view not only takes note of the Calcutta High Court judgment but has for good reasons distinguished it.
25. Similarly, Ld. Counsel’s argument that the majority view is sub silentio on the point that these bricks formed part of the furnace and parts of equipments are not hit by the exclusion clause is not acceptable because I find that this was one of the points of difference of opinion which was referred to the third member and has been fully taken into consideration while arriving at a final decision. If it was the concerned party’s grievance that the tribunal had erred in any particular respect, it was open to it to file an appropriate application before the concerned bench. Ld. Counsel has not been able to show that this order has been set aside or modified by any other competent authority. In the circumstances, I consider that this order of the Tribunal which is admittedly in respect of refractory fire bricks fully covers the case and it is the majority view which is required to be followed in the normal course. I may also mention that it is a very detailed and exhaustive order covering all the relevant aspects and in any eventuality it is not for this bench to pronounce upon the correctness or otherwise of this judgment. Further there is apparently nothing palpably wrong with it; and sufficient cause has not been shown which could lead us to refer the matter to a larger bench. Since the issue is squarely covered by this order, I see no reason to let this matter paid or await any further orders.
26. Insofar as third item namely the glass bags are concerned, they were admittedly used for filtration and even if they were not an integral part of the filter press they were admittedly used alongwith it and could only be considered as ancilliary to it. No technical literature or any other write-up or material has been filed in this regard but from the submissions made before this bench it is apparent that it will be hit by exclusion clause in view of the above position.
27. Summing up, the super refractory (cement) is required to be allowed the benefit of MODVAT whereas the remaining two items namely super refractory bricks (Fired) and the fibre glass filter bags are not eligible for the benefit of MODVAT.
28. In view of the above position the order of the Collector (Appeal) is modified to the above extent. The appeal is disposed of in terms of the above observations and findings.