2000 (11) TMI 153 - HC - Central Excise

Summary

Issues:
Interpretation of Rule 57A of the Central Excise Rules regarding the classification of kraft paper used in manufacturing stainless steel strips and coils as an input or equipment/appliance.

Analysis:
The petitioner argued that kraft paper used for interleaving stainless steel strips is essential to prevent defects and corrosion, thus qualifying as an input under Rule 57A. The rule defines inputs as items used in the factory of production for manufacturing final products, excluding certain categories like machinery and packaging materials under specific circumstances. The court agreed that kraft paper falls within the definition of inputs as it is used in the manufacturing process and not excluded by the rule's provisions.

The Tribunal's view that kraft paper could be considered as equipment or appliance in the manufacturing process was not accepted by the court. The paper, being consumed during the manufacturing process, does not fit the definition of machinery or equipment, which are not typically consumed in production. The Collector of Central Excise confirmed that the kraft paper was used at every stage of coiling and recoiling, emphasizing its role as an input in the manufacturing process.

Referring to a Supreme Court decision, the court highlighted that materials required to make goods marketable must be considered as components of the final product. In this case, the kraft paper is integral to maintaining the quality of stainless steel products and is used within the factory, meeting the criteria to be classified as an input under Rule 57A. The court ruled in favor of the petitioner, determining that the kraft paper is indeed used as an input in relation to stainless steel products and not as an equipment or appliance, as argued by the revenue.