ORDER
K. Sankararaman, Member (T)
1. When this reference application filed by the Collector of Central Excise, Jaipur was called, Shri M.M. Mathur, learned Joint Chief Departmental Representative raised a preliminary point that since the order in question had been passed by a Bench consisting of Members different from those now sitting in the Bench, the requirement of Rule 31 of CEGAT (Procedure) Rules, will not be met. He, therefore submitted that the reference application should be heard by the Bench consisting of the same Members who passed the order under reference.
2. It was pointed out to the learned JCDR, Shri Mathur by the Bench that under Rule 31 cited by him, the same Bench which heard the appeal giving arise to the application for reference to the High Court shall hear such application unless the Honourable President directs otherwise and the purport of this will become clear when one looks into the subsequent Rule 31A which specifically lays down that ‘application for rectification of mistake apparent from the record shall be heard by a Bench consisting of the Members who heard the appeal giving rise such an application unless the Honourable President directs otherwise’. Thus there is a deliberate difference in referring to the same Bench land the same Members of the Bench. The difference in the language of the provisions cited above would indicate that for reference application, the same Bench should hear the same and that there is no requirement that the Members themselves should be the same. Shri Mathur, however submitted that the Bench even in this context would refer to the Bench of Members and not the inanimate one and on that basis it would apply to the Bench as constituted originally and the omission in Rule 31 of this specific position vis-a-vis Rule 31A is a drafting omission which should not affect the requirement stressed by him.
3. Under instructions from the Bench, the Registry made available a| copy of a decision dated 28-12-1993 passed by the Honourable President of! Tribunal issued under Dy. No. 6943/Pre/CEGAT/1993. In terms of this decision, it is seen that it has been clarified by the Honourable President that “all reference applications of special Benches as well as North Regional Bench have to be heard by the Benches as constituted on the day they come up for hearing”. A reference was made therein to the earlier orders dated 18th August, 1986 and 6th May, 1988 and these instructions were reiterated. After perusing the said instructions dated 28-12-1993, Shri Mathur submitted that the above decision had been issued by the Honourable President in terms of the saving clause “unless the President directs otherwise” appearing in Rule 31 of CEGAT (Procedure) Rules. Shri Mathur contended that this would go to show that it will be necessary for the President to issue a specific direction in respect of each reference application where the Members hearing the same happen to be different from those who constituted the original Bench which decided the appeal. A general order may not be enough. That would be the position in view of the language of Rule 31, he concluded.
4. Shri A.N. Haksar, learned Senior Advocate who appeared for the respondents contended the above submissions of Shri Mathur, and stated that the wording of Rule 31 nowhere requires that the Members of the Bench should be the same for deciding that Reference Application. The only requirement is that the Bench should be the same. If the appeal is decided by the North Regional Bench, only that Bench should dispose of Reference Application and not any other Bench say Special Bench or another Regional Bench. There is however, no requirement that the Members who decided the appeal should themselves dispose of the Reference Application as Members of that Bench.
5. Shri V. Sridharan, learned Advocate who was to appear later on in another similar reference matter and who happened to be present in the Court obtained leave of the Bench and stated that there is a Calcutta High Court decision reported in 1960 (60) ITR 52 wherein they had held that disposal of reference application by a Bench of the Income Tax Appellate Tribunal could not be assailed on the ground that the Members of the Bench happened to be different from those who decided the appeal itself earlier. The relevant provision of the Income Tax Act is in pari materia with the relevant provision of the CEGAT (Procedure) Rules and the decision of the Calcutta High Court would apply with equal force to the present matter.
6. We have considered the submissions. We do not agree with the contentions raised by Shri Mathur that there should be a specific clearance by the Honourable President of the Tribunal for each and every reference application if the same is to be heard by Members of the concerned Bench if they happened to be different from those who heard the appeal earlier and passed the order giving rise to the reference application. We also note that Rule 31 dealing with reference application is significantly worded differently from Rule 31A relating to rectification applications. However, this point had not been raised before the Honourable President of the Tribunal when he had passed the order which has been referred to earlier. Hence his order was with reference to the saving clause in Rule 31. Even on this point, as we have already observed above, the order passed would cover all reference applications involving changed composition of the concerned Bench. It is not that the said rule requires that the President should pass separate orders for each and every reference application placed before such Benches.
7. Having disposed of the preliminary objection raised by Shri Mathur as above, we proceed to take up the hearing of the reference application itself.
8. Shri A.K. Singhal, learned Departmental Representative explained the points raised in the reference application. He read out the question of law framed by the Collector for reference to the Honourable High Court. The said question is extracted below :
“Whether Mercury Cathode and Graphite Anode used as electrodes in the manufacture of Caustic Soda by Electrolysis of Sodium Chloride would be considered as inputs eligible for the benefit of Modvat or the same get excluded in terms of Rules, 1944, being a part of machinery/equipment for the manufacture of Caustic Soda”.
Explaining the point he stated that the use of electrode is as parts of the electrolysis cell where the final product, caustic soda is manufactured without electrodes, such manufacture is not possible and the manner of use of the electrodes is as explained above. Since their role is as such parts of machinery they will stand excluded from the scope of Rule 57A in view of the explanation under the said Rule whereby machinery, machines equipment, plant, tools, appliance and apparatus are excluded. Shri Singhal Further submitted that the tribunal has not discussed the merits of the issue involved but had relied upon the two Tribunal decisions and had followed the same. Actually, these two decisions of the Tribunal have not been accepted by the Department and reference applications as required have been filed by the concerned Collector. He also refered to the Tribunal decision in the case of Rapsri Engineering Industries (P) Ltd. reported in 1991 (56) E.L.T. 449 wherein it had been held that graphite rods used for molten metal only performs the mechanical functions and hence constitute apparatus which is excluded for modvat benefit. On mercury cathode, Shri Singhal submitted that its functioning as an electrode is its main function namely to conduct electricity through brine solution to produce caustic soda and any chemical function which it may perform is secondary and incidental. Hence its main use as machinery will exclude it from modvat benefit. He submitted that as there is divergence in the views of the Tribunal Benches, a question of law has, in fact, arisen which may therefore, to be referred to the Honourable Court for their advice. He pleaded that reference application may be allowed.
9. Shri A.N. Haksar, learned Senior Advocate assisted by Shri R. Sudhinder, learned Advocate who appeared for the respondents, M/s. Modi Alkalies and Chemicals Ltd. made a preliminary submission that a reference application should contain questions of law arising from the order of the Tribunal and which require to be referred to the Honourable High Court for their advice. It cannot be used for arguing the appeal afresh as has been done by the learned Departmental Representative. He pointed out that during the hearing of the appeal, the Departmental Representative had made no submission on the merits of the issue but had actually conceded that the issue was covered by the two Tribunal decisions which were relied upon by them (Respondents herein) in support of their appeal. Having conceded the factual position as above and not having raised any submission on merits against the findings of the Tribunal in the said decisions, it will not be open to the departmental side to agitate the issue fresh as now attempted. However, ht added, on merits their case is fully covered by the Tribunal decisions and no question of law has arisen out of the Tribunal’s orders requiring a reference to the High Court. He pleaded that the reference application be dismissed.
10. We have considered the submissions. We have gone through the record. Though, as pointed out by Shri Haksar, the learned Counsel, the Departmental Representative, during the hearing of the appeal, had not made any submission on the merits of the issue but had merely stated that it was correct that the issue was covered by two Tribunal decisions, we cannot accept his argument that the points raised in the reference application do not justify a reference to the Honourable High Court on that score. A question of law arises for reference to the High Court if that question has been decided by the Tribunal irrespective of whether that had been pleaded by the party which makes the subsequent reference. In fact, the Tribunal by following the earlier Tribunal decisions in Standard Alkali reported in 1992 (59) E.L.T. 127 and in Mettur Chemicals reported in 1991 (56) E.L.T. 465 and accepted the plea of the appellants. In other words, these points were argued before the Bench and decision thereon was taken constructively by following the earlier Tribunal decisions. To the extent the questions of law now raised before us relate to the reasons spelt out in the said decisions, these are questions to be considered by us on merits as to whether they are questions of law requiring reference to the Honourable High Court. They cannot be dismissed in limine as not questions arising out of the Tribunal’s decisions.
11. Having taken the above approach, we proceed to examine the questions posed in the reference application.
12. It has been urged in the reference application that the main purpose of the electrodes is to pass electric current which is essential to initiate reaction in the process of manufacture of caustic soda. They are therefore, basically part of the electrolytic cell which is nothing but a machinery. It has therefore, been contended that they get excluded from being considered to be inputs in view of the exclusion clause in Rule 57A which excludes machinery, machines, tools, equipment apparatus and appliances. It has been further contended that the two Tribunal decisions relied upon while passing the order in the present case had not considered the fact that mercury and graphite electrodes were part and parcel of the electrolytic cell used in the manufacture of caustic soda and that these are such parts has been sought to be supported by the decisions in Rapsri Engineering Industries and Mukand Iron and Steel reported in 1991 (56) E.L.T. 449 and 1990 (45) E.L.T. 84 respectively. In these cases it had been held that (1) graphite rods used to the course of manufacture of casting for stirring molten metal are in the nature of appliances or equipment and (2) refractory bricks used as lining material in the furnace were not eligible for modvat credit. In the later case, the appellants had contended that refractories were not merely used fts lining material in the furnace but also participated in the chemical process in Steel making and provided improvement in the quality of steel. On the above reasoning the question for reference has been framed as stated earlier. The arguments have been considered. The goods in question in the present case are different from those that were considered in the two cases cited by the Collector. It is not the case of the Collector that the items under considerations were appliances or equipment as was the decision taken in Rapsri Engineering Industries Pvt. Ltd. The decision in the case of Mukand Iron and Steel was considered by the Honourable Calcutta High Court in Singh Alloys and Steel v. Assistant Collector of Central Excise reported in 1993 (66) E.L.T. 594 and held to be not correct. The goods under consideration are graphite electrode and mercury anode. While they function as such electrodes they are only graphite and mercury. Such goods are not machinery, machine, equipment, took, appliance, apparatus, which are the excluded items in terms of the Explanation Clause in Rule 57A. In the said provision, parts of such machine, machinery etc. are not covered. In view of this position, the argument against the Tribunal decision for making out a question for reference to the High Court fails. We accordingly dismiss the Reference Application. We incidentally find that the West Regional Bench of the Tribunal had also dismissed the Reference Application filed by the department against their decision allowing modvat credit in respect of Titanium Anodes used similarly in the manufacture of caustic soda in the case of Gujarat Alkalies and Chemicals Limited.