S.L. Peeran, Member (J)
1. The stay application and appeal arises from the Order-in-Appeal No. 266/2000 (H-I) dated 14.12.2000 by which the Commissioner (Appeals) has held that oxygen gas utilised for the purpose of cutting blooms and billets into smaller lengths do not come within the category of “raw materials/semi finished goods and hence are not entitled to benefit of Modvat credit in terms of Rule 57F(4). He has confirmed duty of Modvat Credit of Rs. 16,742/- however, he has stayed penalty of Rs. 5,000/-.
2. Heard ld. Counsel Shri J. Sanakararaman and DR Shri A. Jayachandran
3. Ld. Counsel submits that oxygen gas is a necessary ingredient and input for the purpose of cutting blooms and billets into smaller lengths. Without the aid of oxygen gas, the manufacture cannot be done. Therefore, he relies on the Larger Bench judgement in the case of Jawahar Mills Ltd. v. CCE as which confirms Modvat credit. He also relies on Larger Bench judgement rendered in the case of Shri Ramakrishna Steel Industries Ltd. v. CCE, Chennai as and that of Union Carbide v. CCE as . He also refers Larger Bench judgement rendered in the case of CCE v. Surya Roshini as . Ld. Counsel submits that all these Larger Bench judgements rendered by the Tribunal has analysed the definition of inputs and capital goods and has laid down the test to consider it as the same in the light of Apex Court judgement more particularly in the case of CCE v. Rajasthan State Chemical Works as . He also submits that in the case of Mis. Madras Aluminium Company Ltd. v. CCE, Coimbatore as reported in 2001 (4) ECL 78, wherein the very item oxygen gas was considered as a necessary ingredient and input for the purpose of cutting the steel rods and Modvat credit was granted.
4. On a careful consideration of the submissions, I find a lot of force in the submissions made by the ld. Counsel. The Larger Bench judgement rendered in the case of Jawahar Mills (supra), Shri Ramakrishna Steel Inudstries Ltd. CCE, Chennai, (supra), Union Carbide and Surya Roshinin (supra) has clearly laid down the proposition with regard to manner in which the input is required to be considered for the purpose of grant of Modvat Credit. All these judgements were taken into consideration in the case of Madras Aluminium Company Ltd. (supra). It considered oxygen gas as an input for grant of Modvat credit.
5. In view of the issue being covered only in favour of assessee, therefore, the impugned order denying the benefit of Modvat credit on oxygen gas is set aside. The stay appln and appeal are allowed, with consequential benefit, if any.
(Order dictated and pronounced in the open court)