Judgment:
1. The captioned appeal pertains to admissibility of Modvat credit on ANTI-SCALAN used for prevention of scaling in the water circulation tubes. The ld. Collector (Appeals) allowed Modvat credit on Anti-scalan following the ratio of the judgment of this Tribunal in the case of Pragati Paper Mills Pvt. Limited and also relying on the judgment of the Apex Court in the case of J.K. Cotton Spinning & Weaving Mills Ltd. [1997 (91) E.L.T. 35]. The Department has filed the present Appeal.
Appellant-Commissioner, submits that Anti-Scalan is used to prevent formation of scales in the water circulation- tubes; that they keep the pipeline systems unaffected from the scales; that the input in question was being used in relation to maintenance of machinery and not in relation to manufacture of sugar or molasses. The ld. DR refers to the decision of this Tribunal in the case of Synthetics & Cheimcals Ltd. v.CCE [1996 (84) E.L.T. 288] wherein the Tribunal, while examining the admissibility of Modvat credit on Hega Treat and Hega films used in the manufacture of Synthetic Rubber held that the items are not being utilised in or in relation to the manufacture of the final product, but are being used only as corrosive inhibitors and, therefore, they will not be eligible for Modvat credit. The ld. DR submits that anti-scalans are on the same footing and that the ld. Commissioner (Appeals) has erred in allowing Modvat credit on anti-scalans.
3. Shri R. Chibber, the ld. Advocate appearing for the Respondent Assessee submits that anti-scalans are used for keeping the tubes and pipes scale-free. He submits that it is used as a chemical with water to prevent scaling of material in the tubes. The ld. Counsel also submits that this product is used not only for prevention of scaling of the tubes, but also used for purification of water. He submits that there are a number of decisions of the Tribunal on similar items. He specifically refers to the judgment of this Tribunal in the case of Saurastra Chemicals [1995 (80) E.L.T. 302] wherein this Tribunal held that water softening chemicals are inputs for obtaining soft water which is necessary for steam generation and, therefore, credit of input duty under the Modvat scheme will be admissible on these chemicals. The ld. Counsel for the Respondents also cited and relied upon the decision of this Tribunal in the case of J.K. Synthetics Ltd. [1997 (92) E.L.T.126] wherein the Tribunal held that Trichloroethylene used for cleaning of spinnerettes/jets through which the raw material passes, eligible for the benefit of Modvat credit under Rule 57A. The ld. Counsel submits that looking to the use of anti-scalans, it is very clear that it is used for preventing scaling in the tubes and pipes and is more or less akin to the use of trichloroethylene. He, therefore, submits that their case is fully covered by the decision of the Tribunal cited above and, therefore, prays that the appeal may be rejected.
4. Heard the submissions of both sides. Before proceeding to examine the admissibility of Modvat credit on Anti-scalans, let me first find out as to how the product is used and what relation it has with production and in the manufacture of sugar and molasses. From the evidence placed before me, I find that anti-scalans are mixed with water and circulated through the pipes and tubes. These pipes and tubes are used for carrying various items for manufacture of sugar and molasses. The use of the material is thus not for maintenance of machinery, but is essentially connected with the manufacture and production of sugar and molasses. It is not just used for flushing the machines or tubes and pipes to ensure that after that they work properly for a particular time frame. Water is essential for carrying the inputs in the manufacture of sugar and molasses in the present case. This water is carried through the tubes and pipes, therefore, it is a continuous use of anti-scalans and not for one time. Thus, use of the material clearly shows that it is used as an input and is essential for running the process of manufacture of sugar and molasses.
5. I note that the Appellants have cited and relied upon the judgment of this Tribunal in the case of M/s. Synthetics & Chemicals (supra).
The finding of the Tribunal in that case was they are not utilised in relation to the manufacture and, therefore, it was held that Modvat credit will not be admissible on those items. In the instant case I find that the product is used in relation to the manufacture of sugar and molasses. I have also perused the judgment of the Tribunal relied upon by the ld. Commissioner (Appeals) as also the judgmen of the Apex Court. Having regard to these facts that Anti-scalans are used in relation to the manufacture of Sugar and Molasses, I hold that they are inputs and will be eligible to Modvat credit as inputs in terms of Rule 57A of the Central Excise Rules, 1944.
6. In the result, the impugned order is upheld and the Appeal is rejected.