1989 (7) TMI 247 - AT - Central Excise

Summary

Issues Involved:
1. Eligibility of MODVAT credit for refractory materials.
2. Interpretation of the term "input" u/r 57A of the Central Excise Rules.
3. Applicability of Board's Tariff Advices and Tribunal decisions.

Summary:

Issue 1: Eligibility of MODVAT credit for refractory materials
The appellants, manufacturers of iron and steel products, sought MODVAT credit for refractory products (Bricks, Blocks, ramming mass, refractory mortar) used in their manufacturing process. The Assistant Collector and the Collector (Appeals) disallowed this credit, arguing that these materials do not qualify as "inputs" u/r 57A of the Central Excise Rules. The appellants contended that these materials are essential for the manufacturing process and should be considered inputs.

Issue 2: Interpretation of the term "input" u/r 57A of the Central Excise Rules
The Tribunal examined whether refractory materials used for lining furnaces and other equipment could be considered "inputs" under Rule 57A. The explanation to Rule 57A excludes "machines, machinery, plant, equipment, apparatus, tools or appliances" from the definition of inputs. The Tribunal concluded that refractory materials, although essential for the manufacturing process, serve as constructional materials for lining machinery and equipment, thus falling under the excluded category. The Tribunal emphasized that these materials are used for the effective functioning and maintenance of machinery, not directly in the production of the final product.

Issue 3: Applicability of Board's Tariff Advices and Tribunal decisions
The appellants cited various Board's Tariff Advices and Tribunal decisions to support their claim. The Tribunal distinguished the cited cases, noting that the materials in question (e.g., Titanium Metal Anodes, Graphite Electrodes) were not considered machinery or equipment. The Tribunal held that refractory materials, unlike these examples, are used for lining machinery and thus do not qualify for MODVAT credit. The Tribunal also noted that Board's Tariff Advices are not binding on the Tribunal and must be considered on a case-by-case basis.

Conclusion:
The Tribunal upheld the decision of the lower authorities, ruling that refractory materials used in the steel industry are excluded from MODVAT credit under the explanation to Rule 57A. The appeal was dismissed.