Full Judgment
Since the issue in all four appeals is the same, they were heard together and are being disposed of by this common order.
2. The facts of the case in brief are that the respondents were using oxygen/acetylene gases for breaking/cutting of inputs like billets, blooms, slabs, ingots etc. and they were availing credit of duty taken on the inputs under Modvat scheme. The department alleged that oxygen/acetylene gases were not inputs and, therefore, Modvat credit was not admissible on these two items. Accordingly show cause notices were issued to the aforesaid four respondents asking them to explain as to why Modvat credit should not be disallowed to them on the ground that cutting of bigger pieces of scrap into smaller one by oxygen/acetylene gas was neither a part of the integrated process nor it was essentially required in the process of manufacture of the final product. The respondents contended before the lower authorities that the use of oxygen/acetylene gases is necessary and in the integrated process to make the goods marketable; that the marketability of the goods was essential qualification for making the goods dutiable. They referred to the judgment of this Tribunal in the case of M/s. Kesari Steels (Final Order No. A/808/94-NRB dated 8.9.94) wherein the Tribunal held that Modvat credit was admissible on the use of oxygen and acetylene gases for cutting and breaking billets, blooms, slabs, ingots etc. to required specific size. The Commissioner relying on the decision of this Tribunal in the case of R.S. Industries Ltd. and other judgments of the Tribunal allowed the appeals of the assessees holding that Modvat credit was admissible on the use of oxygen and acetylene gases for cutting/breaking blooms, billets, ingots, slabs etc. and hence the appeals of the Revenue.
3. Arguing the appeals, Shri Y.R. Kilanyia, Ld. JDR submits that the use of oxygen/acetylene gases for breaking or cutting of billets, slabs, blooms, ingots etc. is remote and indirect; that the use of these gases in the process is not used in the integrated process; that the ratio of Tribunal decision in the case of Pronotos Limited is completely applicable to the case. Ld. JDR submits that in the instant case the use of oxygen/acetylene gases cannot be compared with the use of these gases for cutting of bigger pieces because cutting is not an integrated process of the manufacture of billets, blooms, slabs, ingots etc. as blooms are manufactured even before cutting. He submits that the Apex Court has admitted the appeal of the department in the case of Kesari Steels. He submits that since the Apex Court has admitted their appeal in the above case which shows that a point of law arises in the case, therefore, supports the view of the appellants that Modvat credit will not be admissible on the use of oxygen and acetylene gases for cutting and breaking blooms, ingots, slabs, billets etc. He, therefore prays that the appeals may be allowed.
4. None appeared for the respondents. On careful consideration of the submissions made by the Ld. JDR and perusal of the evidence on records, I find that the issue is whether oxygen and acetylene gases are inputs for the purpose of Rule 57A or not. I find that the Commissioner had relied on a number of judgments of this Tribunal including the judgment in the case of R.S. Industries Ltd. and Kesari Steels, the words used in relation to the manufacture to qualify to be an inputs themselves first condition and second condition is it should not be an item included in the exclusion list. Oxygen and Acetylene gases are admittedly used for cutting billets, blooms, ingots etc. Now whether cutting is remote process or an integrated process is debatable question. However the fact remains that to make billets, blooms, ingots, etc. marketable, Cutting of these items to the required size is essential, therefore, it can be said that it qualifies the first test of being an item used in relation to the manufacture of the final product. The final product in the instant case is billet, bloom, ingot, etc. Now coming to the second condition for qualifying to be an input is it should not be covered by the excluded category. Oxygen/Acetylene gase is neither plant nor machinery nor a machine, tool, equipment, apparatus, etc. Thus, there is no reason to say that it is an item covered by the excluded category.
5. I further find that this issue came up before the Tribunal in the case of Kesari Steels . In this case, the Tribunal held that Modvat credit shall be admissible. This order of the Tribunal has not been stayed either by a Larger Bench of this Tribunal or by any Court and since the facts are identical, the ratio shall be applicable to the facts of the present case. Having regard to the above discussion and finding as also the case law, I hold that Modvat credit on oxygen/acetylene gases shall be admissible to the assessees. In this view of the matter, I do not find any legal infirmity in the impugned order, the same is therefore, upheld and the appeals are rejected.