1994 (5) TMI 83 - AT - Central Excise

Summary

Issues:
Interpretation of Rule 57A of the Central Excise Rules regarding the classification of Grinding Belts as inputs for modvat credit.

Detailed Analysis:
The appellant, a manufacturer of handtools, claimed modvat credit for Grinding Belts used in the manufacturing process. The Superintendent of Central Excise disputed the classification of Grinding Belts as inputs under Rule 57A, leading to a show cause notice demanding recovery of the modvat credit. The Addl. Collector's order excluded Grinding Belts from the definition of 'input' under Rule 57A, stating they do not qualify for modvat credit. The appellant argued that Grinding Belts were integral to the manufacturing process and should be considered inputs.

The appellant cited the judgment of the Hon'ble Supreme Court in a previous case, emphasizing that items necessary for a process that would be commercially inexpedient without them should be considered 'in the manufacture of goods.' Referring to various Tribunal judgments, the appellant argued that Grinding Belts should be classified as inputs for handtool manufacturing. However, during the hearing, no representative appeared for the appellant, but a request was made to decide the appeal on merits.

The Tribunal analyzed Rule 57A, which excludes certain items from the definition of inputs, including tools used in the manufacturing process. The Tribunal noted that Grinding Belts were used for cleaning tools before the Nickel Plating process and were classified under Central Excise Tariff Item 68.02. The Tribunal referenced the Harmonised Commodity Description and coding system, explaining that Grinding Belts fell under the category of tools or contrivances, which are excluded from modvat credit eligibility.

The Tribunal determined that operationally, Grinding Belts functioned as tools or contrivances in the manufacturing process, falling within the Exclusion category of Rule 57A. The appellant's argument likening Grinding Belts to steel balls in a cement mill was dismissed, as Grinding Belts were used for cleaning and polishing tools, making them tools or contrivances. Consequently, the Tribunal upheld the Addl. Collector's decision to exclude Grinding Belts from modvat credit eligibility, rejecting the appeal.

In conclusion, the Tribunal held that Grinding Belts were not eligible for modvat credit as they fell within the Exclusion category under Rule 57A of the Central Excise Rules. The judgment emphasized the operational function of Grinding Belts as tools or contrivances in the manufacturing process, leading to the rejection of the appeal.