V.P. Gulati, Member

1. This appeal is against the order of the Collector of Central Excise (Appeals), Madras. The learned Collector (Appeals) denied the benefit of MODVAT credit in respect of oxygen and acetylene gas used by the appellants in the manufacture of the specified finished product under Rule 57A. The learned Collector (Appeals) has held as under in this regard:

As regards the gases, I am unable to agree with the appellants view that oxygen and acetylene should also merit Modvat credit. Cutting torch is basically an appliance used for cutting and welding. The gases are primarily used in the cutting torch, which falls in the excluded category of inputs under Rule 57-A as the gases used along with the cutting torch have also disqualify for the credit.

2. The learned Counsel for the appellants pleaded that this Bench of the Tribunal as also the East Regional Bench, Calcutta have allowed the benefit of Modvat credit in respect of Oxygen and Acetylene gas used in the manufacture of specified finished product under similar circumstances.

3. The learned SDR concedes that the matter is covered against the Revenue. He has no specific plea to make in this regard.

4. We observe that this Bench of the Tribunal in their order No. 757/90) in Appeal No. E/59/90 decided on 19.9.1990 reported in [1991] 32 ECC 366 (SRB) : in regard to the similar issue held as under:

This Bench of the Tribunal in the case of M/s Steel Industries Kerala Ltd in Appeal No. E/932/89/MAS decided on 13.8.90 has taken the view that the inputs in question would be eligible for MODVAT credit if used in or in relation to the manufacture of the end-product. East Regional Bench in the case of the Collector of Central Excise v. Hindustan Development Corporation reported in MANU/CK/0025/1989 has also taken the similar view. Besides, there is a trade notice issued by the Calcutta-II Central Excise Collectorate in No. 126/GK-72/CE/Cai-II/90 dated 12.7.90 to the effect that MODVAT credit on the oxygen and acetylene gases used for cutting runners and risers in the castings and for welding purposes and similar process of cutting and welding should be permitted.

5. The West Regional Bench, Bombay in the case of Mukund Iron and Steel Works Ltd reported in MANU/CM/0024/1989 - has held as under:

Now coming to the issue, whether it could be regarded as a tool or an input for the tool, we find that acetylene gas cannot be used by itself in isolation for metal cutting. In the torch, both acetylene gas and oxygen gas get mixed and oxyacetylene gas only is capable of producing a flame of high temperature. Hence, acetylene gas by itself cannot be said to perform the function of metal cutting unless it is used through the medium of torch, where oxygen gas also gets mixed. In view of the aforesaid position we are of view that the acetylene gas by itself cannot be considered as tool, though it may be used in relation to metal cutting.

Now the question to be considered is whether it is to be considered as an input for the tool, namely the torch. Admittedly acetylene gas is stored in a cylinder from which the gas is drawn and passes through the torch and in that process it gets consumed. The same is the position with regard to oxygen. They are not either components or raw materials for the making of the tool. At the most, they can be construed as a consumable gas for operation of the tool to produce flame of high temperature. MODVAT credit, even by way of explanation to Rule 57A cannot be denied because of the fact that the input happens to be a consumable, so long as it is used in or in relation to the manufacture of the final product. In our view, acetylene gas can be construed to be an input required for producing flame of high temperature, which is used in or in relation to the manufacture of the final product, namely castings. We, are, therefore, of the view that MODVAT credit is required to be extended in respect of Acetylene gas.

6. In view of above, we find no reason to depart from