ORDER

Per Justice U.L. Bhat: A common question of law arises in these appeals. They have been heard together and are being disposed of by this common order.

2. The appellant in Appeal E.209/89—M AS is a manufacturer of steel castings and machinery parts under Chapter Nos.73 and 84 of Central Excise Tariff. Appellant sought to avail Modvat credit on inputs in relation to the final product of steel casting. Chemicals and resin are used in making sand mould. Sand moulds are used in the manufacture of steel castings. The Superintendent issued notice stating that the appellant was not eligible to take credit of duty paid on such inputs for making sand mould. The appellant asserted the right to take such credit. The Assistant Collector rejected the claim and on appeal, this order was confirmed by the appellate Collector. The common appellant in appealsE.405 to408/94 is a similarly situated manufacturer who also suffered similar adverse orders.

3. The South Regional Bench which heard Appeal E. 209/89 referred it to a larger Bench. Consequently, the remaining appeals were also referred to a larger Bench. That is how these appeals have come up before this larger Bench.

4. Shri K. Narayanan, Advocate appeared in Appeal E.209/89—MAS, Shri V.P. Namasivayam, Consultant appeared in Appeal Nos.E.405 to 408/94—M AS and Shri Sanjeev Sachdeva, SDR for the Revenue. We have also heard Shri V. Sridharan, Advocate in appeals where similar question has been raised.

5. It is necessary to be clear about the claim of the appellants who manufacture steel castings. For such manufacture, sand moulds are necessary. Sand moulds may be green moulds or dry moulds etc. In these cases, the appellants are using dry sand mould. Shri Sridharan stated that his client uses green sand mould. Shri K. Narayanan and Shri Namasivayam explained the process of manufacture in the following terms:—

Mould is necessary for making steel castings. Wax model of casting is prepared first and that is covered by a mixture of sand, chemicals and resin and the same is heated on the oven as a result of which molten wax evaporates. Thus a cavity surrounded by sand mixture is formed. Through a hole molten metal is poured into the cavity which gets filled up. It is allowed to cool and after the process if complete, the sand mix is broken up and steel casting is available. Shri Sridharan explained the green sand mould procedure in the following terms:—

A pattern of the steel casting is prepared and placed in an empty box and the box is filled with sand mix containing sand, chemicals and resin and the sand is rammed around the pattern. If any hollowness is needed, a core is inserted inside the pattern. Molten metal is poured into the pattern and when the molten metal solidifies the sand is removed and pattern is separated and the steel casting is recovered. This procedure is similar to the one explained in "Principles of Metal Casting" by R.W. Heine & Others, published by Tata McGraw—Hill Publishing Company Limited. To remove the casting the sand mould has to be removed and it ceases to be sand mould.

6. It is necessary to emphasise that what the appellants are claiming is Modvat credit for duty paid on chemicals and resin which are mixed with sand for the purpose of making sand mould, the duty being utilised for payment of excise duty on the final product namely, steel castings. Appellants are not claiming Modvat credit for the duty paid on chemicals and resin for payment of duty on sand moulds. In fact the appellants are not clearing sand moulds for home consumption. It is their contention that sand moulds as such are not excisable goods at all and the chemicals and resin used are only inputs as defined in Rule 57A of the Central Excise Rules, 1944 for the final product, namely steel casting. The answer of the Revenue is that sand moulds are marketable products and excisable goods but exempted under a Notification issued by the Government and hence the question of utilising the credit for payment