1993 (6) TMI 146 - AT - Central Excise

Summary

Issues:
1. Eligibility of Modvat Credit for Aloxide paper Belt Metalite.
2. Interpretation of Rule 57A of Central Excise Rules, 1944.
3. Conflict of views between different Tribunal Benches.

Analysis:

Issue 1: Eligibility of Modvat Credit for Aloxide paper Belt Metalite
The appeal was filed against the rejection of Modvat Credit for Aloxide paper Belt Metalite used in processing plywood. The Assistant Collector deemed these goods as appliances not eligible for Modvat Credit. The appellant argued that these goods are essential for manufacturing plywood and V.T. Boards. The Tribunal examined previous decisions and held that Aloxide coated paper is not an excluded item under Rule 57A and, therefore, eligible for Modvat Credit. However, there was a conflicting view by the South Regional Bench, which considered sandpaper as a tool excluded from Modvat Credit.

Issue 2: Interpretation of Rule 57A of Central Excise Rules, 1944
The Tribunal analyzed the exclusion clause under Rule 57A, which lists items not eligible for Modvat Credit. The appellant contended that Aloxide paper Belt Metalite should not be considered an appliance under this rule. The Tribunal differentiated between tools and consumable items, stating that consumables like Aloxide paper Belt Metalite, which require frequent replacement, do not fall under the excluded category of permanent tools or appliances. The Tribunal emphasized that excluded items are those used over a long period and not requiring frequent changes.

Issue 3: Conflict of views between different Tribunal Benches
The Tribunal noted conflicting decisions between different benches regarding the classification of items as tools or accessories excluded from Modvat Credit. While some decisions considered consumable items like Lap Films and BOPP films eligible for Modvat Credit, others viewed items like sandpaper as tools ineligible for the benefit. The Tribunal referred the matter to the Hon'ble President of the Tribunal to constitute a larger Bench for resolving the conflicting interpretations of Rule 57A and the eligibility of certain items for Modvat Credit.

In conclusion, the judgment addressed the eligibility of Aloxide paper Belt Metalite for Modvat Credit, interpreted Rule 57A of the Central Excise Rules, and highlighted the conflicting views among different Tribunal Benches, leading to a referral for resolution by a larger Bench.