1996 (7) TMI 305 - AT - Central Excise

Summary

Issues involved: Whether lubricant oils and greases used for machinery maintenance qualify as inputs for Modvat Credit in sugar and molasses manufacture.

Summary:
The single issue in this case is the eligibility of lubricant oils and greases as inputs for Modvat Credit in the production of sugar and molasses. The appellant argued that these lubricants are essential for machinery operation and thus qualify as inputs used in relation to the manufacturing process, citing precedents and emphasizing legislative intent. On the other hand, the respondent contended that the crucial factor is whether the alleged inputs are essential for manufacturing the goods in question.

Upon reviewing the arguments, it was noted that Rule 57A does not explicitly define inputs but includes deeming provisions and exclusions. While lubricants and greases are not excluded, the question of whether they contribute to the manufacturing process needed examination. Previous cases have explored the qualification of inputs under Rule 57A without establishing a general rule. The distinction was made between essential inputs for the final product and those merely enhancing machinery operation, with examples like freon gas and anti-freeze agents deemed essential. The judgment concluded that lubricants and greases do not meet the criteria for eligible inputs under Rule 57A, upholding the lower decision and dismissing the appeal.