V.P. Gulati, Member (T)

1. This is an appeal by the Revenue against the order of Collector of Central Excise (Appeals), New Delhi. Brief facts of the case are that the respondents M/s. Gwalior Rayon Silk Manufacturing Company manufacture Caustic Soda and utilize Titanium Substrate insoluble Anodes in the Electrolytic Cells in which the Electrolysis of Sodium Chloride takes place. These Electrodes are purchased by the respondents and duty under Tariff Item 68 was charged thereon. The respondents were refused permission to avail of the credit of the duty paid on these electrodes by way of set off in terms of Notification No. 201/79 by the Asstt. Collector for the reason that since these electrodes were part of the Electrolytic cells and equipment used in the manufacture of the Caustic Soda, the benefit of the notification could not be allowed. The Collector (Appeals) however, took note of the fact that Notification No. 201 of 79-CE extended the benefit of the set off in respect of Item 68. goods used in the manufacture of any finished excisable goods subject to the other conditions of the Notification and absorb the wording of the notification was wide enough to cover these goods, within the ambit of the notification and that the appellants were entitled to the benefit of the notification as claimed. The Revenue have urged the following grounds in the appeal :-

"Notification No. 201/79-C.E., dated 4-6-1979 issued under Rule 8(1) of Central Excises and Salt Act, 1944, exempted all excisable goods (hereinafter referred as the "said goods") on which the duty of excise is leviable and in the manufacture of which any goods falling under T.I. 68 of the first Schedule to the Central Excises and Salt Act, 1944 (hereinafter referred to as "the inputs") have been used from so much of duty of excise leviable thereon as equivalent to the duty of excise already paid on the inputs. It would be seen from the contents of the notification that all excisable goods are exempted (referred to as in said goods) on which duty of excise leviable and in the manufacture of which any goods falling under T.I. 68 (referred to as inputs) have been used, from so much of excise duty leviable there on as is equivalent to the duty of excise already paid on the inputs.

The notification refers to the goods falling under T.I. 68 should have been used as 'inputs' in manufacture of excisable goods (said goods). Terminology input means a commodity which is put into or used in the manufacture of excisable goods i.e. the said goods. In the instant case, the excisable goods manufactured is Caustic Soda. The Titanium Substrate Insoluble Anode though an item falling under T.I. 68 is not used in the manufacture of excisable goods, i.e. caustic soda but used as a part of electrolytic ceils which is an ultimate part of caustic soda plant and does not form part of excisable goods i.e. the said goods, as such the same cannot be termed as input for the manufacture of excisable goods i.e. caustic soda. Thus it would be seen that Titanium Substrate Insoluble Anode, is not entitled to the benefit of set-off under Notification No. 201/79-C.E., dated 4-6-1979, not being input as held by Collector (Appeals) in the instant case.

Further, it would be worth noting that Notification No. 201/79, dated 4-6-1979 is basically an exemption notification which exempts finished excisable goods from so much of the duty as is already paid on the T.I. 68 goods used in the manufacture of finished goods. Thus, it is not merely a set-off Notification but an exemption notification, which exempts duty payable on the finished excisable goods. In view of this it is not proper and legal to allow credit of duty paid on Titanium Substrate Insoluble Anode which are used in the Machinery and Plant used for the Machinery and equipment used in the manufacture of excisable product i.e. caustic soda.

In view of the above reference to amendment of Notification No. 201/79-C.E., dated 4-6-1979 by Notification No. 105