1997 (1) TMI 194 - AT - Central Excise

Summary

Issues:
- Eligibility of steel crucibles, fibre glass filter mesh, and filter cloth for Modvat credit under Rule 57A of the Central Excise Rules, 1944.

Analysis:
1. The appellants challenged the order-in-appeal disallowing Modvat credit on steel crucibles, fibre glass filter mesh, and filter cloth, stating they were used in the manufacture of final products. The Assistant Collector disallowed the credit, leading to the appeal.

2. The appellants, engaged in manufacturing goods under Modvat provisions, declared steel crucibles, fibre glass filter mesh, and filter cloth as inputs. The show cause notice alleged these items did not qualify as inputs. The appeal was dismissed by the Collector (Appeals).

3. The appellant's consultant argued that steel crucibles stored molten metal during casting, fibre glass filter mesh filtered molten metal, and filter cloth finished goods, making them eligible for Modvat credit. He cited a Tribunal decision supporting Modvat credit for filter mesh used in manufacturing rings and pistons.

4. The respondent's representative contended that the lower authorities correctly denied Modvat credit as the items were not used in manufacturing final products.

5. The Tribunal, referencing a previous decision, allowed Modvat credit for fibre glass filter mesh used in manufacturing pistons and rings, following the appellant's argument. However, the eligibility of steel crucibles and filter cloth was remanded to the Assistant Collector for further determination.

6. Regarding steel crucibles and filter cloth, the Tribunal referred to a Larger Bench decision stating that materials used in activities related to manufacturing final products could qualify as inputs. The Tribunal remanded the issue to determine if steel crucibles were self-contained equipment or part of machinery.

7. Upholding the Tribunal's decision, the eligibility of steel crucibles and filter cloth for Modvat credit was remanded to the Assistant Commissioner for further assessment based on the manner of their use, in line with the Larger Bench decision.

8. The appeal concluded with fibre glass filter mesh deemed eligible for Modvat credit, while the eligibility of steel crucibles and filter cloth was remanded for reassessment by the Assistant Commissioner.

This judgment clarifies the criteria for determining the eligibility of specific items for Modvat credit under Rule 57A of the Central Excise Rules, emphasizing the necessity of demonstrating their direct use in the manufacturing process to qualify as inputs.