SRF LTD Vs. COLLECTOR OF CENTRAL EXCISE

JUDGEMENT

(1.) THE above appeals arise out of the Commissioner of Central Excise (Appeals), Ghaziabad who has upheld two separate adjudication orders of the Assistant Collector who had disallowed Modvat credit on Tri Eth -ylene Glycol (TEG) and Tungsten wire on the ground that these two items are not inputs under Rule 57A of the Central Excise Rules 1944. Both items form the subject matter of appeal No.E/3082/98 -NB while the subject matter of appeal No.E/3083/98 -NB is only TEG.

(2.) THE appellants are represented by Shri Bipin Garg, learned Advocate who contends that TEG is used to clear the filter through which polyester film melt is filtered during the process of conversion of melt polymer, as TEG has properties to dissolve in polyester polymer and clear the dust and TEG is, therefore, essential for the process of manufacture. They contend that Tungsten wire is used to ionise the air between "chill roll" and molten polymer and gives a sticky action to the chill roll and if it is not used molten polymer cannot be properly cast and polyester film cannot be stretched on Machine Direction Orientation (MDO) and Transverse Direction Orientation (TDO) which is an integral part of the manufacture of polyester film. They relied upon the decision of the Hon'ble Tribunal in the case of J.K. Synthetics reported in 1996 (85) E.L.T. 286 wherein TEG has been held to be an input eligible to Modvat credit under Rule 57A and on the decision in their own case reported in 1996 (84) E.L.T. 203, wherein it was held that Trichloroethylene used to clean the mesh for filtering the molten material Caprolactum in the manufacture of nylon yarn or DMT or polyester yarn as an input eligible for Modvat credit. The reliance is placed on the decision of the Larger Bench of the Tribunal in the case of Union Carbide India Ltd. v. Collector of Central Excise, Calcutta reported in 1996 (86) E.L.T. 613, to support the appellants' claim that tungsten wire is an input entitled to credit under Rule 57A. The alternate submission of the appellants in respect of tungsten wire is that even if it is held that this item is not an input eligible to credit under Rule 57A, it would be capital goods entitled to credit under Rule 57Q of the Central Excise Rules.

(3.) LEARNED DR, Shri Arunachalam cites the decision of the Tribunal in the case of Ester Industries Ltd. v. Collector of Central Excise, Meerut reported in 1997 (90) E.L.T. 381, denying Modvat credit on TEG and submits that the lower appellate authority has correctly relied upon the above cited decision to hold that credit is not admissible on TEG. Regarding tungsten wire, he submits that it is in the nature of an accessory/appliance of the machine and, therefore, hit by the exclusion clause in Rule 57A.