Per: Shri R. lavaraman. M (T)

This is an appeal against the Order in Original No. 11/MP/93 dt. 23.3.93 passed by the Collector of Central Excise, Baroda. In the said order, the Collector has confirmed the demand for a total amount of Rs. 12,49,180.53 under Rule 57-I of the Central Excise Rules by invoicing the extended period. The Collector has also imposed a penalty of Rs. 5 lakhs on the appellant under Rule 173Q(1) of the Central Excise Rules.

2. The appellants are engaged in the manufacture of caustic soda, chlorine, H.C.L, Chloromethanes, and sodium cynide. They tiled declaration for availing Modvat credit in respect of various inputs. The impugned inputs involved in this appeal are caustic soda, Hydrochloric acid and Ion Exchange resins limited to their usage in the effluent treatment plant. The other inputs are M.E.G (Mono Ethylene Glycol) and Mefron/Freon gases, which are used in the chilling plant. Modvat credit was sought to be denied on the ground that Freon/Mefron gases are used in respect of functioning of refrigeration plant and they cannot be construed to be inputs used in or in relation to the manufacture of the final product. They are used only for operational ne