ORDER
V.P. Gulati, Member (T)
1. This appeal is against the order of the Collector of Central Excise (Appeals), Madras. The issue involved in the appeal relates to eligibility to MODVAT credit in respect of Molybdenum plates and Tungsten nozzles. The learned lower appellate authority has held that MODVAT credit is not available in respect of the two items in view of the proviso to Rule 57A under which machines, machinery, plant, equipment, apparatus, tools or appliances used for producing or processing of any goods are not considered as inputs for the purpose of MODVAT credit Under Rule 57A and that the two items are in the nature of apparatus or appliances. The learned lower appellate authority has also relied upon the decision of the West Regional Bench in the case of Mukund Iron and Steel Works Ltd. v. C.C.E., reported in 1990 (45) E.L.T. 84 (Tri.) and has referred to the observation of the Tribunal in that case that the materials which are required for effective functioning and maintenance of the machinery would stand excluded from the purview of the MODVAT Scheme. Adverting to the use of the two items, the learned lower appellate authority has entered the following findings:
“In this case also, tungsten nozzles and molybdenum plates are in the nature of material which bring into or shape the end-product rather than are in the nature of materials fed into the manufacturing process for chemical reaction or for improving the quality of the ceramic fibres. The fact that tungsten nozzles are rendered unfit for further use after a period of 25 to 30 days and the molybdenum plates get soldified into the molten mass and cannot be salvaged on account of the nature of the process of manufacture, would not detract from the real nature of their function in the manufacturing process.”
2. The learned Advocate for the appellants pleaded that the appellants are manufacturers of Ceramic fibres and in the manufacture of the same a mixture of Calcined Alumina and Silica sand is converted into a molten mass in electric furnace. His plea is that the Molybdenum plates act as electrodes and they carry the current required for the furnace to melt the Alumina Silicate mix and are used in conjuction with water cooled electrode jackets and that the same lasts for about 1000 hours or so. He has pleaded that the Molybdenum is capable of standing very high temperature the melting point of the same being 2600°C. He pleaded that electrodes, therefore, have to be considered as inputs as defined under Rule 57A. He referred us to the literature on Tungsten & Molybdenum in the form of GE Data Sheet (Product Data Sheet 7230-A May 1, 1989). Under this the uses of Tungsten and Molybdenum have been set out as under:
“Tungsten and molybdenum are widely used for high temperature parts in lamps and electronic tubes as well as in such non-lamp applications as kiln furniture, furnace boats, heating elements, and heat shields on rockets.”
He also drew our attention to the technical write-up filed by the appellants wherein the use of the electrodes is set out as under :
“There are three electrode assemblies, each consisting of one number water cooled MS jackets and two numbers Molybdenum plates of size 100 mm x 115 mm x 3 mm thickness. These electrodes have to carry a current of the order 900 amps and has to withstand temperature upto 2000 C. The Moly plates and a portion of the water cooled electrode jackets is immersed in the molten material (sketch enclosed).
Molybdenum has a melting point of 2621°C This is the best material available for conducting electricity as well as withstanding the melt temperature.
The liquid melt moves continuously from the Moly electrodes towards the nozzle and due to this the Molybdenum plate gets eroded and mixes with the molten Alumina-Silicate melt.”
He has also cited the case of W.S. Industries (India) Ltd. v. CCE, reported in 1991 (56) E.L.T. 433 (Tribunal), in support of his plea. In regard to Tungsten Nozzles, he pleaded that the molten mass in the furnace is tapped through Tungsten. nozzles or cones which have irudium insert, before it is fiberised using compressed air into ceramic fibre. He pleaded that the cones have to stand a high temperature of Alumina Silicate molten mass and as and when the furnace cools down the molten mass surrounding the Tungsten cone solidifies around the cone blocking the irudium hole and thereafter the cone becomes unfit for use. He pleaded that the cones have a life of about 25 to 30 days in the regular course of production. He relied on the same case law referred to above in support of this plea.
3. The learned SDR for the Department pleaded that the electrodes are only for carrying the current and do not participate in the manufacturing process as in the case of the electrodes used in the electrolytic path. Regarding Tungsten cones, he pleaded, these were more part of the mechanism to produce the fibres and should be considered as a part of the machine. He pleaded that the case of W.S. Industries (India) Ltd. cited by the appellants supra does not apply to the facts of this case.
4. We have given a careful thought to the pleas of both the sides. We observe that in a number of cases we have held that the electrodes which are used in the electrolytic paths are eligible for the benefit of MODVAT credit. This has been held for the reason that these electrodes participate in the electrolysis process. In the present case the electrodes conduct the electricity to generate the heat. These stand on a different footing. The electrodes have a very long life and can be taken to be only as a part of the furnace rather than as an input used as an in-process material. As referred to by the learned Collector (Appeals), in the case of the West Regional Bench’s order the Tribunal has held that the items which are used to make an equipment functional had to be considered as a part of that machine rather man as an input used in or in relation to the manufacture of the specified finished products. The ratio of the ruling in the case of W.S. Industries (India) Ltd. would not apply to the facts of this case as in that case we have held as under :
“It is seen that what is excluded from the purview of the Rule is only such apparatus, tools and appliances among other things, which are used for producing or processing of any goods or for bringing about any change in any substance in relation to the manufacture of final product. We observe that so far as the cone is concerned as such it does not bring about any change in any substance in or in relation to the manufacture of final product nor any processing of the material takes place as such by these devices. In this view of the matter, therefore, the pyrometric cone cannot be said to be falling under the excluded category, as the excluded category of the goods mentioned in (i) above are only such, which are used for producing or processing of any goods or bringing about any change in the substance in relation to the manufacture of the final product. The pyrometric cone is only an aid in the process of manufacture of the ceramic materials but it is an essential aid and is designed specifically for being placed in the furnace to give an indication of the degree of fire. In that view of the matter it has to be held that it is used in or in relation to the manufacture of the final product. We, therefore, hold that on merits the findings of the learned lower authorities are not maintainable and the plea of the appellant has to be allowed. The appeal is thus allowed in the above terms.”
In view of the above we hold that so far as Molybdenum plates are concerned, the same are not eligible for the benefit of the MODVAT credit. In regard to Tungsten nozzles we hold these help in giving shape to the end-product and have to be held to be an item in the nature of a die or a tool used for processing the materials. Since tools, etc. are ineligible for the benefit of the MODVAT credit in terms of the definition of ‘input’ under Rule 57A, we hold that the benefit of MODVAT credit will not be available in respect of the same. We, therefore, dismiss the appeal.