BAKELITE HYLAM LTD. Vs. COMMISSIONER OF CENTRAL EXCISE

JUDGEMENT

(1.) THE common issue in dispute in all these appeals is the eligibility to Modvat credit of duty paid on "Teflon -coated glass fabric belt" by the assessees, who are manufacturers of non -refractory surfacing preparations, organic composite solvents, thinners and bonding emulsions. According to the Department, the item in dispute cannot be considered as input in the manufacture of non -refractory surface preparation so as to extend credit in terms of rule 57A of the Central Excise Rules, 1944. We have heard both sides.

(2.) THE use of the belt is as under:

(3.) WE are of the view that the goods in question certainly participate in the manufacturing process by providing a non -stick and heat resistant smooth surface whereby the final product "heritage flakes" (involving conversion of china clay/mud/sand into flakes of desired colours and textures by mixing with pigments, binders, etc., and poured in semi -solid form/spread to the desired thickness of 150 to 200 microns over "Teflon -coated glass fabric belts") can come into existence. The final product cannot be manufactured without using the goods in this manner. The function performed by the disputed item is comparable to the function of goods (felts, wire mesh, etc.,) held to be inputs in Union Carbide : [1996] 86 ELT 613 (Trib. -Del) [LB] which has been followed subsequently by the Patna High Court in Collector of Central Excise v. Tata Engineering and Locomotive Co. Ltd. : [1999] 111 ELT 9 (Patna) to extend credit on endless wire mesh and industrial cloth used in the manufacture of paper, by the Gujarat High Court in CCE v. Botliboi and Co. Ltd. : [2010] 257 ELT 191 (Guj) to extend credit on grinding wheels used on grinding machines for smoothening rough cuttings and other components and the decision of the hon'ble Andhra Pradesh High Court in Sirpur Paper Mills Ltd. v. Collector of Central Excise : [2003] 159 ELT 17 (AP) holding that wire mesh and woollen felt used in the machinery in the manufacture of paper and paper products, were inputs eligible for credit under rule 57A of the Central Excise Rules, 1944. The impugned order itself does not dispute that the use of the goods under consideration is comparable to the goods forming the subject matter of Straw Products : [1992] 59 ELT 572 (Trib. -Kol) wherein the credit was held to be admissible to chemicals, resins for water treatment in the course of manufacture of paper as also felt and wire netting of stainless steel used in the manufacture of paper, which decision was approved by the larger Bench in the case of Union Carbide : [1996] 86 ELT 613 (Trib. -Del) [LB]. In fact, the lower appellate authority has accepted the applicability of Straw Products : [1992] 59 ELT 572 (Trib. -Kol); however, he has chosen to follow the ratio of the Tribunal's Order No. 299/90 -SRB, dated April 4, 1990 in Appeal Nos. E/267 and 268/89 MAS in Andhra Pradesh Paper Mills Ltd. v. Collector of Central Excise : [1990] 50 ELT 252 (Trib. -Chennai) holding that soda ash, alfoc powder used for softening of water are not inputs eligible for credit, as this decision was rendered by the South Regional Bench, Chennai under whose jurisdiction he was functioning. In Union Carbide : [1996] 86 ELT 613 (Trib. -Del) [LB], the larger Bench drew support from the earlier order in the case of Joy Foam P. Ltd. v. Collector of Central Excise : [1996] 83 ELT 72 (Trib. -Chennai) holding that grease -proof paper used in the machine for manufacture of foam products is an eligible input under rule 57A of the Central Excise Rules, 1944.