R. Jayaraman, Member (T)

1. The aforesaid four appeals from the Department involve consideration of the common issue - namely eligibility of Modvat Credit on graphite anodes and titanium metal anodes used in the electrolysis of brine solution for obtaining caustic soda lye. The common issue involved is whether, they come under the excluded category of item figuring in the explanation to Rule 57A. Hence both the sides preferred to advance common arguments. They were heard together and all the Appeals are proposed to be disposed of by this common order.

2. E. 479/90 is directed against the order in appeal passed by Collector (Appeals) bearing No. GSM. 284/90 B. III dated 20-9-1989 allowing the appeal of the respondents and permitting availment of modvat credit in respect of Titanium metal anodes. The other three appeals listed at S. Nos. 2 to 4 above have been filed by Collector of Central Excise, Baroda against the common order of the Collector (Appeals) bearing No. 208/90 dated 16-4-1990, under which he allowed the three appeals of the respondents, thereby holding that duty paid on graphite anodes used in the electrolytic cell for manufacture of caustic soda is eligible for modvat credit.

3. Heard the elaborate arguments of Shri Mondal, the ld. S.D.R., on behalf of both the Collectors. At the outset, he was fair enough to concede that this Bench as well as the South Regional Bench have held that Titanium metal anodes are eligible inputs for modvat credit. Even the reference application brought forth by the Department was dismissed by this Bench. He also agreed that in the case of graphite electrodes, the Board themselves have clarified that they, being consumables, are eligible for modvat credit. However, certain aspects, which should have been looked into by the Bench, as is reflected from the subsequent decisions in similar cases, appear to have been missed by the Bench, while deciding the issue in favour of the assessees in the earlier decision. He pleaded that it would be his endeavour to refer to them.

4. The main thrust of his arguments can be summed up as below:

(i) The Board's clarification contained in letter M.F.D.R. No. 822/51/86-TRU, dt. 21-10-1986 (reproduced in pages 174-175 of E.L.T. dt. 15-12-1986) has not looked into this question as to whether they go with the functioning of the electrolytic cell (which is an equipment) or go into the product stream for the manufacture of caustic soda lye. It only says that graphite electrodes are a consumable used in the manufacture of metal. Moreover, that clarification is with regard to graphite electrodes used in the manufacture of iron or steel products and carbon electrodes used in the manufacture of aluminium. The issue involved in the present appeals relates to graphite anodes, which are admittedly terminals of electrolytic cell, which is an equipment used in the manufacture of caustic soda lye. The function of graphite anodes in electrolytic cell is only to conduct electricity and it goes as part of the equipment as terminal of the electrolytic cell.

(ii) He referred to the McGraw Hill Dictionary of Scientific and Technical Terms. According to this dictionary, A cell is a cup jar or vessel containing electrolytic solutions and metal electrodes to provide an electric current ( conductometric or potentiometric) or for electrolysis (electrolytic). 'Electrolysis', according to the dictionary means a method, by which chemical reactions are carried out by passage of electric current through a solution of an electrolysis or through a molten salt. 'Electrolytic Cell' means a cell consisting of electrodes immersed in an electrolytic solution, for carrying out electrolysis. 'Electrolyte' means a chemical compound, which, when molten or dissolved in certain solvent - usually water will conduct an electric current. From the above, it is evident that graphite anode or Titanium metal anode is an electrode for conducting electricity for the process of electrolysis and it is a part a