1992 (1) TMI 215 - AT - Central Excise

Summary

Issues:
Whether Silicone Spray used in the factory for cooling the mould surface during injection moulding of thermo-plastic components is eligible for MODVAT credit under Rule 57A.

Detailed Analysis:
The appeals were filed against orders passed by the Collector of Central Excise (Appeals), Delhi, involving the eligibility of Silicone Spray for MODVAT credit. The main issue was whether Silicone Spray, used to prevent moulded parts from sticking to the mould surface during injection moulding, qualifies as an input under Rule 57A. The lower authorities had deemed Silicone Spray as a lubricant, akin to equipment or tools excluded from MODVAT credit. The appellant argued that Silicone Spray is essential for cooling moulds to avoid product damage and cited relevant case laws to support their claim.

The contention put forth by the learned SDR was that Silicone Spray, used for lubrication in mould release, should be considered as equipment or tools excluded from MODVAT credit. The central question was whether Silicone Spray, facilitating the detachment of components from moulds during plastic moulded component production, qualifies as an input under Rule 57A's Explanation clause. The Explanation excludes machines, machinery, equipment, tools, or appliances used in manufacturing or processing goods from the definition of 'inputs' for MODVAT credit.

The judgment referred to precedents like Collector of Central Excise v. Weldekar Laminates Pvt. Ltd. and Collector of Central Excise v. Heavy Engineering Corporation Ltd. to analyze the eligibility of inputs for MODVAT credit. The Tribunal's decision in the Weldekar Laminates case emphasized that inputs need not form part of the final product to qualify for MODVAT credit, as long as they are used in or in relation to the manufacturing process. The judgment highlighted the importance of understanding the term 'appliance' in determining whether Silicone Spray qualifies as an input for MODVAT credit.

The write-up provided by the appellants detailed the application of Silicone Spray in injection moulding, emphasizing its role in lubrication, mould release, and productivity enhancement. The analysis considered the scientific and technical aspects of Silicone Spray's function in the manufacturing process, concluding that it contributes to the quality and output of the moulded product. The judgment relied on the Tribunal's decision in the Weldekar Laminates case to overturn the lower authorities' decision and allow the appeals, granting consequential relief to the appellants.

In conclusion, the judgment delved into the technical aspects of Silicone Spray's function in injection moulding, its classification as an input for MODVAT credit under Rule 57A, and the precedents supporting the eligibility of similar inputs in manufacturing processes. The detailed analysis provided a comprehensive understanding of the legal reasoning behind allowing the appeals and granting relief to the appellants based on the interpretation of relevant legal provisions and case laws.