COMMISSIONER OF C. EX. Vs. VIMAL ALLOYS LTD.

JUDGEMENT

(1.) THIS is an application filed by Revenue stating that a point of law arises out of Tribunal's Final Order No. A/273 -276/99 -NB, dated 6 -4 -99. The question of law is formulated to read as :

(2.) THE facts of the case briefly stated are that the respondents herein are engaged in the manufacture of products of Iron and Steel falling under Chapter 72 of the Central Excise Tariff Act, 1985. They are availing Modvat credit. The respondents took Modvat credit on oxygen/acetylene gas used for breaking/cutting of bigger pieces of scrap of iron and steel into smaller pieces for the manufacture of final product i.e. steel ingots. The Department alleged that Modvat credit was not admissible on oxygen/acetylene gases. Accordingly, a SCN was issued to the respondents asking them to explain as to why the Modvat credit should not be disallowed to them and the amount should not be recovered. The Asstt. Commissioner disallowed the Modvat credit and confirmed the demand of duty. The Commissioner (Appeals) set aside the order of the Asstt. Commissioner and allowed the appeal of the respondents herein allowing Modvat credit on the use of oxygen/acetylene gases. The Revenue filed an appeal against this order and the Tribunal following the decision in its earlier order in the case of Kesari Steels, v. Collector [1994 (74) E.L.T. 123] held that Modvat credit shall be admissible.

(3.) ARGUING the case for the Commissioner concerned Shri V.M. Udhoji, ld. DR submits that there are conflicting judgments that this Tribunal in the case of CCE, Chandigarh v. Prontos Ltd. reported in 1995 (79) E.L.T. 419 held that oxygen used for cutting the bigger scrap pieces into smaller pieces is not a part of integrated process nor essentially required in process of manufacture of ingots, therefore, Modvat credit was not available on oxygen gas. He submitted that in the case of Jai Bharat Steel Co. Ltd. v. CCE reported in 1990 (49) E.L.T. 527 similar view was taken. He submits however, that in the case of Kesari Steels v. CCE, Indore reported in 1994 (74) E.L.T. 123, it was held that oxygen/acetylene gas used in relation to manufacture of final product are eligible for Modvat credit under Rule 57A of the Central Excise Rules, 1944. He submits that in view of this conflict in the decisions of the Tribunal, a reference may be made to the Hon'ble Punjab and Haryana High Court at Chandigarh to settle the law finally.