Judgment:
1. That are applications filed by Commissioner of Central Excise, Chandigarh, for referring the following question of law to the Hon'ble High Court, arising out of Tribunal Final Order No. A-417-428/97 NB dt.
27-6-97; "Whether use of oxygen/acetylene gases in cutting of scrap of Iron & Steel into smaller pieces to be fed into a furnace is a part of integrated process connected with the ultimate production of final products namely steel ingots and other steel castings and is essentially required in process of manufacture of final products and whether oxygen/acetylene gases are eligible inputs for modvat credit"?.
2. When the matter was called no one was present on behalf of the Respondents inspite of notice. I, therefore, heard Shri Swatantra Kumar, ld. DR and perused the records.
3. The ld. DR, submitted that the Respondents manufacture products of Iron and Steel and avail of Modvat Credit of duty paid on inputs under Rule 57A of the Central Excise Rule; that use of Oxygen/Acetylene gases in the breaking/cutting of billets, blooms slabs into smaller pieces is to remote and indirect tobe integrally connected with ultimate production of ingots and other steel castings; that the Appellate Tribunal in the case of Pronts Ltd., Vs. CCE 1995(79) ELT 419 held that the use of gases in cutting larger steel pieces is certainly a process away form the stage at which manufacturing starts; that the Tribunal in the case of CCE Chandigarh Vs. Vimal Allows Ltd. 2000 (121) ELT 796 has already referred the same issue to the Hon'ble High Court of Punjab and Haryana in view of conflicting decision of the Tribunal. The ld. DR further, mentioned that the Civil Appeals No. 2128/1997 filed by the Commissioner Indore against the Tribunals final Order No. A/808/94-NRB dt. 8-9-94 on the same issue has already been admitted by the Hon'ble Supreme court as reported in 1997(95) ELT A 226.
4. I have considered the submissions of Ld. DR and perused the records.
The Tribunal in the Final Order No. A/417-428/98-NB held that as the scrap received from the suppliers could not be straightaway fed into the furnace because of its size and shape, it was essential that the scrap is reduced into proper size and shape by cutting them using Acetylene/Oxygen Gases. According to the Tribunal this was an essential and integral part of manufacturing process of the final products and it satisfied the test laid down in the case of CCE Vs. Pronts Ltd. It was also observed in the said Order that the Appellate Tribunal in the case of M/s R.S. Industries Vs. CCE Jaipur 1996(84) ELT 138 and in the case of Panchmahal Steel Vs. CCE 1996(83) ELT 91 had allowed Modvat Credit in respect of gases used for cutting billets for manufacturing bars and rods. It, therefore, appears that different views are held by the different Benches on the availability of Modvat Credit in respect of Oxygen/Acetylene Gases. In the case of Kesari Steel Vs. CCE 1994 (74) ELT 123 it was held that Oxygen/Acetylene Gases used in relation to manufacture of final products are eligible for Modvat Credit and the Civil Appeal filed against this decision has been admitted by the Apex Court as reported in 1997(95) ELT A 226. In view of these facts and circumstances, I am of the view that this case is a fit case for being referred to the Hon'ble High Court. Accordingly the reference application is allowed and the following question of law is referred to the Hon'ble High Court of Punjab and Haryana : "Whether use of oxygen/acetylene gases in cutting of scrap of Iron & Steel into smaller pieces to be fed into a furnace is a part of integrated process connected with the ultimate production of final products namely steel ingots and other steel castings and is essentially required in process of manufacture of final products and whether oxygen/acetylene gases are eligible inputs for modvat credit"?.