ORDER
K. Sreedharan, J. (President)
1. This application is for referring question of law for decision by the concerned High Court as provided by Section 35G(1) of the Central Excise Act, 1944. The question sought to be referred is :
“Whether Ramming Mass used for lining of furnace and Oxygen/Acetylene used as cutting device can be treated as inputs under Rule 57A of the Central Excise Rules, 1944? ”
2. Short facts which led to the above issue are as follows.
3. Respondents, M/s. Keshari Steels ( a division of Reliance Ispat Industries Ltd.) are engaged in the manufacture of iron and steel items, namely, continuous cast billets and bars falling under Chapter 72 of the Schedule to the Central Excise Tariff Act, 1985. They are also availing the benefit of Modvat scheme under Rule 57A of the Central Excise Rules, 1944. Respondents were availing credit on ramming mass which are used in or in relation to the manufacture of the final product. Department took the view that respondents wrongly availed credit on ramming mass and oxygen gas as these were not considered as inputs eligible for Modvat credit. In this view, show cause notices were issued. Assistant Collector disallowed the Modvat credit claimed by the respondents. Aggrieved by that order, respondents went up in appeal. Appellate authority, namely, Collector (Appeals), Indore allowed the appeals and reversed the order of the adjudicating authority wherein Modvat credit was disallowed. Revenue came up in appeal before this Tribunal questioning the correctness of the order passed by the appellate authority. This Tribunal by Final Order Nos. A/195-196/97-NB (S/M), dated 3-4-1997 dismissed the appeals. Aggrieved by the said decision, this application for referring the above stated question was filed under Section 35G(1) of the Central Excise Act, 1944.
4. In Singh Alloys & Steel Ltd. v. Assistant Collector of Central Excise, 1993 (66) E.L.T. 594 (Cal.), a learned single Judge of the Calcutta High Court considered the question as to whether ramming mass used in relation to manufacture of steel are eligible for credit under Modvat scheme envisaged by Rule 57A of the Central Excise Rules, 1944. Learned Judge took the view that ramming mass certainly do not come within the dictionary meaning of machines or machinery or instruments or appliances and that the said item can be considered as inputs. Accordingly, ramming mass used in relation to manufacture of steel were found eligible for Modvat credit. A contrary view was taken by a learned single Judge of Karnataka High Court in the case of Canara Steel Ltd. v. Union of India -1998 (98) E.L.T. 81. View taken therein is that ramming mass is in the form of a powder which is used as lining material in the electric arc furnace to avoid erosion of the brick lining. Consequently, it is more in the nature of a part of the furnace and hence a part of machinery and equipment used for producing the final product. Since ramming mass is not an input used in or in relation to the manufacture of final product, it was held that the manufacturer is not entitled to get Modvat credit of the duty paid on ramming mass.
5. A Bench of two Members of this Tribunal in Modella Steel Alloys Ltd. v. C.C.E., Indore, 1999 (31) RLT 203, after considering the Karnataka High Court decision in Canara Steels Ltd., tried to distinguish the same observing:
“We find that the Hon’ble High Court came to the conclusion that ramming mass and Kalminax Sleeves are parts of machinery. Beyond that they did not examine whether parts of a machine are covered by the exclusion clause or not. However, the Tribunal in the case of Union Carbide India Ltd. 1996 (86) E.L.T. 613 had examined this aspect and came to the conclusion that a part or parts of machinery are not covered by the exclusion clause under the explanation to Rule 57A of the Central Excise Rules, 1944 and hence are eligible inputs for Modvat credit. Thus, the judgment of Hon’ble Karnataka High Court is distinguishable.”
A learned single Member of this Tribunal in C.C.E., Chandigarh v. Steel Strips Alloys Ltd., 1999 (32) RLT 299 followed the decision in Union Carbide India Ltd. 1996 (86) E.L.T. 613 distinguishing the judgment of the Karnataka High Court.
6. In Keshari Steels v. Collector of Central Excise, Indore, 1994 (74) E.L.T. 123 a Bench of this Tribunal consisting of two Members decided that ramming mass used in relation to manufacture of final product and oxygen gas/acetylene also used in relation to manufacture of final product are eligible for Modvat credit under Rule 57A of the Central Excise Rules, 1944. This decision of the Tribunal has been taken in appeal to the Supreme Court. Their Lordships admitted the appeal which was numbered as Civil Appeal No. 2128 of 1997 of 1997 (95) E.L.T. A226 [S.C]. Thus, the Tribunal’s conclusion that ramming mass and oxygen gas/acetylene gas used in relation to manufacture of final product are eligible to Modvat credit is pending in appeal before the Supreme Court in Civil Appeal No. 2128 of 1997. The question now pending before the Supreme Court is now sought to be referred for decision by the High Court. When the Supreme Court is already ceased of the issue in Civil Appeal No. 2128 of 1997, we consider it advantageous to the parties to refer the matter to the Supreme Court as provided by Section 35H of the Act.
7. In D.B. Madan v. Commissioner of Income-tax, 1992 (60) E.L.T. 679, their Lordships observed:
“It is always open to High Court to follow its earlier decision and answer the question of law one way or the other according as whether the view taken in the earlier case commenced itself to it or whether, in its opinion, that earlier view needs reconsideration. But it cannot always be said that in all cases where a similar question of law had been answered in an earlier case in a particular way, an identical question of law arising in a later case would cease to be a referable one.”
In the instant case, two High Courts have expressed contrary views on the eligibility of Modvat credit on ramming mass and oxygen gas/acetylene gas used in relation to manufacture of final product. Further, the correctness of the view taken by this Tribunal that they are inputs entitled to Modvat credit is pending consideration by the Supreme Court. Under these circumstances, we feel that question of law sought to be referred should be referred to the Supreme Court as provided by Section 35H of the Act. We do so accordingly.
