1991 (4) TMI 251 - AT - Central Excise

Summary

Issues:
Eligibility of modvat credit for Hot-tops, sealing compound, and Refractories (ramming mass) as inputs for stainless steel ingots.

Analysis:
The dispute revolves around the eligibility of modvat credit for Hot-tops, sealing compound, and Refractories (ramming mass) as inputs for stainless steel ingots. The appellant, a manufacturer of stainless steel ingots, filed a declaration to avail modvat credit on these items as inputs for their final products. The Asstt. Collector initially disallowed the claim, citing these items as part of machinery falling under the exclusion clause.

On appeal, the Collector took a broader view, stating that the goods claimed, except for ingot moulds, are consumed in the manufacture of the final product, even if they are not part of the final product itself. The Collector allowed the modvat credit for hot-tops, ramming mass, and sealing compounds, leading to the appeal before the tribunal.

The central question is whether the respondents are entitled to modvat credit for hot-tops, ramming mass, sealing compounds, and foundry fluxes. The explanation to Rule 57A defines inputs as items used within the factory of production in relation to the manufacture of final products, excluding machinery and equipment used for production.

The tribunal analyzed Notification No. 177/86, which specifies final products eligible for modvat credit on certain inputs. The tribunal agreed with the Departmental Representative that the items in question, hot-tops, ramming mass, and sealing compounds, are part of equipment or apparatus and fall under the exclusion clause of Rule 57A. The notification should be read subject to the explanation in Rule 57A, as a notification cannot override the rule itself.

Arguments based on Supreme Court decisions regarding raw materials were rejected, as the items in question were deemed part of the apparatus and not raw materials for manufacturing the end product. The tribunal held that the Collector was not justified in allowing modvat credit for the three items and set aside the Collector's order, ultimately allowing the appeal.