Full Judgment
2. Question that arises for consideration is whether lancing pipe used for evacuating the molten metal from the furnace is to be regarded as input used in relation to manufacturing process and eligible for Modvat Credit under Rule 57A of the Central Excise Rules, 1944.
3. Assessee manufactures ferro alloys in submerged electric arc furnace on continuous basis. The furnace is charged continuously and metal/slag are tapped out of refractory lined furnace every 2 to 2 1/2 hours. The tap hole is normally kept closed by a mud plug made out of a mixture of soil and coke dust and in every tapping this mud plug had to be burnt out by oxygen lancing. In this process, the lancing pipe which is made of steel gets consumed by melting and mixed with ferro alloys in the form of iron. The assessee contends that the lancing pipe which gets converted into iron is an input used in the manufacturing process entitled to Modvat credit. Melted lancing pipe goes to add the quantity of the finished produce coming out of the furnace. The whole quantity of that is excisable article. Therefore, these lancing pipes get changed in form, becomes assessable to excise.
4. Adjudicating Authority negatived the contention raised by the manufacturer and took the view that manufacturer is not entitled to Modvat credit of the duty paid on lancing pipe. On appeal by the assessee the Commissioner took the view that lancing pipe is an input eligible for availing Modvat credit. Consequently he reversed the order passed by the Adjudicating Authority. Hence these appeals at the instance of the Revenue.
5. Lancing pipes are used to discharge oxygen into the furnace to cut open the tap holes provided in the furnace to draw out metals from furnace. Lancing pipe while cutting open the holes comes into contact with the molten steel in the furnace. On account of the high temperature in the furnace, these pipes melt and join the steel. While so the lancing pipe gets wholly consumed in the process. The pipe so consumed form part of the molten metal which is being taken out of the furnace. Since this pipe gets so consumed in the process, we hold that it is entitled to Modvat credit. This view is supported by the Larger Bench decision of this Tribunal in Union Carbide India Ltd. v. C. C.E., Calcutta-I 6. In the above view we find no ground to interfere with the order passed by the Lower Appellate Authority, Consequence, therefore, is these appeals fail. They are accordingly dismissed.