Full Judgment
2. Teflon Coating on the belt not only helps release of heritage flake because of its non-stick property. It also makes flakes surface even and imparts finish. During the course of manufacture the coating gets consumed and has to be replaced after approximately 5 mts. of manufacture of Heritage Flakes.
3. There is no substitute or alternate method available for the teflon coated belt.
The point that falls for determination is whether the same can be treated as an input in relation to the manufacture of the notified finished product.
2. The learned Counsel for the appellants has pleaded that the appellants case is covered by the decision of the larger bench in the case of Union Carbide India Ltd. v. CCE, Cakutta-l reported in 1996 (86) E.L.T. 613 and also in the case of Straw Products Ltd. v. CCE reported in 1992 (59) E.L.T. 572. She has pleaded that in those cases, the Tribunal has held that woollen felts and wire mesh used in the paper portion of the paper mills are eligible for the benefit of Modvat credit. She has pleaded that While belt has a carrier functioning during the manufacturing process, it also facilitates release of the notified finished product after it is formed. She has pleaded that use of the belt in question is similar to the use of the felts and wire mesh and therefore, the appellant would be entitled to the benefit of Modvat credit. The learned Counsel also urged that by virtue of the characteristics of the teflon which is coated with the glass fabric it provides for non-sticky surface and therefore the use of the belt should be taken to be comparable to the release paper which is used in the manufacture of certain products and which has been held to be eligible input for the purpose of Modvat Credit. In this connection, she also cited the following judgments : Her plea is that since release functioning is performed by the belt the same should be allowed the benefit of Modvat credit.
3. Shri V. Thyagaraj, the learned SDR has pleaded that the ratio of the decisions citied by the learned Counsel for the appellants could not be pressed into service as in the case of felts and wire mesh where the Tribunal allowed the benefit, these were participating in the manufacturing process. The belt in question, he pleaded, provides only a medium for transportation of the materials and the belt was not participating in the manufacturing process. In rejoinder the Counsel for the appellants has pleaded that the very fact that the belt provided non absorbing smooth surface, it should be treated as required for the manufacture of the goods.
4. We have considered the. pleas, made by both the sides, We observe from the narration of facts in the order of the lower authority, that the belt functions more like a convey or belt. Teflon coating is non-sticky and is able withstand the high temperature. The smooth surface is provided for release of the material to be carried. Use of such material does not make the belt anything more than the conveyor belt. The nature of the use is therefore, is not similar to the use of felts and wire mesh as in the case of paper manufacturing. In the case reported in 1996 (86) E.L.T. 613 (Union Carbide) taking into consideration, the nature and use of the item, it was considered as a part of the machinery and allowed the benefit of Modvat Credit. In para 18, the Tribunal has held as under: 18. (i) Felt, Phospher Bronze, stainless steel wire mesh, lin cloth, Dandy cloth etc. Pulp with excess water comes from the pulp making machine to the paper making machine. Pulp is allowed to fall on phospher bronze or stainless steel wire mesh. Pulp particles remain on the wire mesh and web of pulp fibre is formed. It moves on moving wire mesh (endless) and is allowed to fall on felt (cotton, woollen or synthetic). The moving felt carries the pulp web to the drier and is calendered or pressed being wound on rolls and treated further.
Wet paper is passed between Dandy Rolles covered with Dandy cover so as to smoothen the surface of the paper. These articles are damaged in the process and require replacement periodically. They are replaceable goods used in the paper making machine in the course of manufacture of paper. They can be regarded in a way, as parts of the paper making machine or machinery used in the machine or for the purpose of the machine; but by their very purpose, they are goods used in relation to the manufacture of paper or paper products and hence are "inputs" as contemplated in Rule 57A. In the light of what we have indicated above, the decisions in Collector of Central Excise v. Ashim Paper Products (P) Ltd. -1990 (50) E.L.T. 12 (Tribunal) ERB, Andhra Pradesh Paper Mills Ltd. v. Collector of Central Excise(Tribunal) SRB, Sirpur Paper Mills Ltd. v. Collector of Central Excise -1991 (56) E.L.T. 649 (Tribunal) SRB are not correctly decided. On the other hand, the decisions in Gujarat Alkalies & Chemicals Ltd. v. Collector of Central Excise(Tribunal), WRB, Cominco Binani Zinc Ltd. v. Collector of Central Excise - 1990 (48) E.L.T. 283 (Tribunal) SRB, Travancore Cochin Chemicals Ltd. v. Collector of Central Excise(Tribunal) SRB, Collector of Central Excise v. Standard Alkali(Tribunal), Straw Products Ltd. v. Collector of Central Excise & Customs - 1992 (59) E.L.T. 572 (Tribunal) ERB, Collector of Central Excise v. Emami Paper Mills Ltd.(Tribunal) ERB and Collector of Central Excise v. Bihar Caustic and Chemicals Ltd. -1994 (72) E.L.T. 739 (Tribunal) ERB are correctly decided.
In one of the appeals, the goods stated to be "inputs" is copper wire used in the manufacture of metal containers. The appellant who manufactures metal containers, prints on the metal containers name and the other particulars as per the requirements of the customer.
Thin sheets are cut according to required size and the blanks are formed into cylinder and welded. For the process of welding two copper wires are passed between the two weld wheels. A.C. current is generated in the weld wheels as a result of which heat is generated.
The copper wire takes away the excess molten tin at the junction of the two ends of the tin and the heated soft edges of the tin sheets joined are together. The copper wire comes out at the other end with small particles of tin deposits. This copper wire cannot be used again and is disposed of as copper waste. It is stated that the Department has accepted the same as copper waste for the purpose of clearance on duty. The copper wire is not consumed in the course of manufacture. It becomes waste by deposit of particles of tin and has to be replaced. Though it cannot be said that copper wire is used in the manufacture of metal container in the sense that it is raw material which enters into the finished product directly or indirectly, it can safely be said that copper wire is used in relation to manufacture of metal container since without the use of the copper wire, the manufacturing process cannot be conducted.
Copper wire is, therefore, "input" as contemplated in Rule 57A.The use of the item viz. Teflon cannot be compared with release paper inasmuch as release paper does not become part of the plant and machinery like converyor belt. The Tribunal in Order No.A/820-21/96-NB, dated 15-3-1996 reported in 1996 (13) RLT 910 in the case of Synthetics & Chemicals v. CCE, Allahabad has held that in the case of Hegatreat and Hegafilm which are used in the pipes as inhibitor and in various condensers for maintaining the temperature of polymixisation reaction are not goods for the purpose of Modvat purposes. The reference application filed arising out of that order was also dismissed vide CEGAT order reported in 1997 (18) RLT 257 after taking note of various judgments including the pleas of the appellants therein, it was held that the above two items are not eligible for Modvat credit under Rule 57A. What emerges from the above is that unless it can be shown that an item in question for which Modvat credit is claimed participate in the manufacturing process of the notified finished product in the manner as set out in the larger bench decision in the case of Union Carbide (cited supra), the benefit cannot be given. In the present case, the belt only provides the function of carriage of the goods and can not be taken to be participating in the manufacturing process. The plea of the appellants that the function performed by the belt in question is like that of release paper cannot be accepted as the belt is used not for its release function for use of carriage of material and its surface has been made smooth and non-sticky by use of teflon only to ensure use of carrier function and to enable repetitive use. In the above background we dismiss the appeals.