1996 (2) TMI 160 - AT - Central Excise

Summary

Issues Involved:
1. Eligibility for Modvat credit on chemicals and resin used in sand moulds for manufacturing steel castings.
2. Marketability and excisability of sand moulds.
3. Interpretation of "inputs" u/r 57A of the Central Excise Rules, 1944.

Summary:

1. Eligibility for Modvat credit on chemicals and resin used in sand moulds for manufacturing steel castings:
The appellants, manufacturers of steel castings, sought Modvat credit on chemicals and resin used in making sand moulds, which are essential for the casting process. The Revenue contended that sand moulds are marketable and excisable goods, thus disqualifying the chemicals and resin from being considered as inputs for Modvat credit. The Tribunal concluded that chemicals and resin used in sand moulds are indeed inputs "used in relation to the manufacture" of steel castings, thus eligible for Modvat credit.

2. Marketability and excisability of sand moulds:
The Tribunal examined whether sand moulds are marketable and excisable goods. It was determined that sand moulds are not marketable due to their temporary nature and lack of evidence of marketability provided by the Revenue. Consequently, sand moulds were held not to be excisable goods.

3. Interpretation of "inputs" u/r 57A of the Central Excise Rules, 1944:
The Tribunal emphasized that the term "inputs" u/r 57A includes goods used "in or in relation to the manufacture" of final products, which extends beyond traditional raw materials. The chemicals and resin used in sand moulds play a significant role in the manufacturing process of steel castings, thus qualifying as inputs under Rule 57A. The Tribunal rejected the contrary views in previous judgments, affirming that the chemicals and resin used in sand moulds are eligible for Modvat credit.

Conclusion:
The impugned orders were set aside, and it was held that the appellants are entitled to take Modvat credit for the duty paid on chemicals and resin used in the preparation of sand moulds in the process of manufacturing steel castings and use the credit for payment of duty on the final product.