Judgment:
1. This is a Revenue appeal against Order-in-Appeal No. 47/93, dated 31-3-1998 holding that the chemicals in question namely Chromic acid and Trichloro-ethylene are to be considered as inputs for the purpose of degreasing operation and for chrome plating of the rings in order to provide excellent wear resistance. The finding given by the Commissioner in Para 5 is reproduced herein below :- "5. I am unable to agree with the applicant that the chemicals in question, namely chromic acid and trichloro-ethylene are to be considered as an appliance. According to me, the chemicals cannot be considered as an appliance. From the technical write up, it is seen that the chromic acid is used as a raw material for chrome plating of the piston rings in order to provide excellent wear resistance.
The chromium plating is done by electro depositions method. The conventional solution of electro depositing chromium has two constituents namely, chromic tri-oxide flakes which combines with water to form chromic acid and sulphate ions introduced as sulphuric acid or sulphate salt. As per the write up, chromic acid flakes are added in concentration of 200 to 250 gms./ litre. From the above, it is clear that the chromic acid itself forms part of the chromium plating. For this reason also it cannot be said that the same can be considered as an appliance. Similarly, Trichloro-ethylene is used as a degreasing agent in degreasing the rings. Without the degreasing of the rings, the tin plating and subsequent chromium plating will not be effective. Therefore Trichloro-ethylene has to be considered as an input inasmuch as without the degreasing operation, the piston rings cannot be manufactured to meet the commercial standards. I, therefore hold that both the above chemicals have to be considered as inputs and would be eligible for the Modvat credit. In fact, my predecessor has held the same view in his Order-in-Appeal No. 152/91, dated 27-5-1991 in A. No. 52/91 (B). In view of the above, I do not find any merit in this application and accordingly reject the same." 2. The Revenue is aggrieved with this Order and contend that as per their declaration, the said inputs are used only for surface treatment.
It is stated that surface finishing and plating of rings are covered under exclusion clause under Rule 57A as the said inputs are used only as appliance used for producing the final products and are used for bringing about change of the products in relation to final products.
Hence it is contended that Modvat credit cannot be allowed in respect of these inputs and hence seek for restoration of the Order-in-Original by setting aside the impugned order.
3. I have heard learned DR on the grounds made out in the Appeal memo.
Learned Consultant submits that the issue is no longer res Integra and in their own case, the Bench has already taken a view in Order No.540/96, dated 26-2-1996 that both the items namely chromic acid and trichloro-ethylene are required to be treated as inputs in the process of manufacture of respective final product namely piston rings and in that view, I have rejected the Revenue Appeal. He prays for dismissing the Appeal.
4. On a careful consideration of the issue, I notice that the matter pertaining to the same issue in respect of the respondent's own case has been heard by the Bench and by Order No. 540/96, dated 26-2-1996,1 have rejected the Revenue appeal. The finding arrived at by the Bench in Para 2 to Para 7 are noted below.
"2. The issue in the Appeals is whether the benefit of Modvat credit could be given in respect of Trichloro-ethylene used as degreasing agent and chromic acid used for chromium plating. The learned Lower authority, taking into consideration the use of these articles has allowed the benefit of Modvat credit.
3. The learned SDR does not contest that so far as the use of the materials in the manufacturing process as held by the learned Lower authority is concerned. He has pleaded that these processes cannot be taken to be in or in relation to the manufacture of the finished product.
4. We observe that chromic plating is a technical requirement for the manufacture of the respondents' notified finished product and degreasing of the rings during the course of manufacture is also a technical requirement. For that reason, it has been rightly held by the learned Lower authority that two materials are used in or in relation to the manufacture of the notified finished product.
5. The learned Consultant pleaded that this Tribunal in respect of use of the same material has allowed the appellants the benefit of Modvat credit and referred to Order No. 172/93, dated 21-4-1993.
6. We have held in a number of cases that so long as the use of the materials either in the preparatory stage or during the process of the manufacture or in the finishing stages is in relation to the manufacture of the finished product or to render the goods marketable and the use is a technical necessity, the Modvat credit is allowable. Therefore, following the earlier decision in the case of Addisons & Co. Ltd., we hold that the orders of the learned Lower appellate authority are maintainable in law and dismiss the appeals.
7. Since the cross objection filed is only in the nature of comments, the same are dismissed as misconceived in law." 5. On applying the ratio of the above noted judgment, this Appeal is rejected.