COLLECTOR OF CENTRAL EXCISE, 'BANGALORE versus M/S. ESCORTS MAHLE LTD.

Citation: [2003] 3 S.C.R. 1205 · Decided: 06-05-2003 · Supreme Court of India · Bench: M.B. SHAH · Disposal: Dismissed

Judgment (excerpt)

r 
' 
COLLECTOR OF CENTRAL EXCISE, 'BANGALORE 
v. 
MIS. ESCORTS MAHLE LTD. 
MAY 6, 2003 
[M.B. SHAH AND ARUN KUMAR, JJ.] 
Central Excise and Salt Act, 1944; Section 35(G)/Central Excise Rules; 
Proviso to Rule 57 A: 
A 
B 
MOD VAT credit on certain chemicals used in the manufacture of steel C 
product-Claims of-Held: Since use of these chemicals is essential for 
neutralizing the acidic vapours to prevent damages to the furnace in the 
manufacture of steel product, the final product, the assessees are entitled to 
MODVAT credit on these chemicals. 
In these appeals Revenue challenged the eligibility of assessees to 
MODVAT credit on Ramming Mass, Fibre Glass and Filter Mesh used in 
the manufacture of steel pistons. 
D 
It was contended for the assessees that chemicals like Ramming Mass, 
Fibre Glass and Filter mesh have been used to neutralize the effect of acidic E 
vapours produced on melting of steel in the manufacture of steel pistons, 
the final product. Therefore, assessees were entitled to MODY AT credit 
on these chemicals. 
Dismissing the appeals, the Court 
F 
HELD: Keeping in view the manufacturing process of the steel 
wherein chemicals viz. Ramming Mass, Fibre Glass and Filter Mesh are 
used to control the acidic vapours generated during the steel 
manufacturing, this Court has held in Collector of Central Excise v. Steel 
Authority of India limiled• that use of such chemicals is essential in the G 
process of manufacturing of steel, the final product. Since manufacturing 
process used in the manufacture of steel pistons in the instant case was 
same, the asscssees were entitled to MODVAT credit on these chemicals, 
viz. Ramming Mass, Fibre Glass and Filter mesh. (1207-G; 1208-C( 
1205 
H 
1206 
SUPREME COURT REPORTS 
(2003] J S.C.R. 
A 
*Collector of Central Excise v. Steel Authority of India ltd. iii 
C.A.No.661512003 decided by Supreme Court, relied on. 
Electric Furnace Steel Making (American Institute of Mining)" Page 157, 
referred to. 
B 
CIVlL APPELLATE JURISDICTION: Civil Appeal No. 5168-5170 of 
c 
2001. 
From the Judgment and Order dated I. 12.99 of the Karnataka High 
Court in T.R.C. Nos. 3-5 of 1996. 
WITH 
C.A. Nos. 443/2002, 2128/97, 968, 1122 and 1810 of2003. 
Raju Ramachandran, Additional Solicitor General, T.L.V. Iyer, Joseph 
Vellapally, Harish N. Salve, Ms. Vibha Datta Makhija, K.C. Kaushik, 
D Ms. Smita Inna, B. Krishna Prasad, Praveen Kumar, P.V. Patnakar, Nitin 
Bhardwaj, s.unil Kumar Jain, Kamal Mohan Gupta, A.K. Shahi, M.P. Sharma, 
P.C. Jain, Rajesh Kumar, R. Santhanam, Rajendra Singhvi, Ashok K. Singh, 
'Ms. Meenakshi Arora and Ms. Mona Chettri for the appearing parties. 
E 
F 
The Judgment of the Court was delivered by 
ARUN KUMAR, J. These appeals are directed against the judgment of 
the Karnataka High Court while answering a Reference made under Section 
35(G) of the Central Excise and Salt Act, 1944. The question relevant for our 
purpose is reproduced as under: 
"Whether on the facts and in the circumstances of the case the 
appellate Tribunal is right in law in holding that the applicants are not 
eligible to MODY AT Credit in respect of Ramming Mass, Fibre glass 
and filter mesh used in or In relation to the manufacture of pistons on 
the ground that they are covered under Proviso to Rule 57 A of the 
G 
Central Excise Rules." 
In order to appreciate the controversy, the relevant facts are that the 
assessees claimed benefit of MODY AT Credit in respect of Ramming Mass, 
Fibre glass and filter mesh. These items are used in the process of manufacture 
of steel and without the use of these item,s the end product cannot be produced. 
H The assessees in these cases are engaged in the manufacture of items of steel 
-
... 
t 
C.C.E. v. ESCORTS MAHLE LTD. [ARUN KUMAR. J.] 
1207 
like pistons in the Escort's case. The nianufacture takes place in electric arc A 
furance refractories. It is submitted on behalf of the assesses th~t during the 
course of manufacture steel is melted at a very high temperature. Steel produces 
acidic vapours when melted at such a high temperature. To contain the vapour 
and neutralise them chemicals like dolomite or magnesite are used during the 
course of manufacturing process. Ramming Mass, fibre glass and filter mesh B 
are processes in which chemicals are used to line the furances to neutralise 
the effect of acidic vapours produced during the course of melting steel. 
Unless these chemicals are used, the furance may burst. Accordingly, it is 
I

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