1996 (7) TMI 382 - AT - Central Excise

Summary

Issues:
1. Denial of Modvat credit on specific materials under Rule 57A of Central Excise Rules.
2. Interpretation of the term "inputs" under Rule 57A.
3. Classification of fibre glass filter mesh and steel/silicon crucibles as excluded inputs.
4. Application of the Larger Bench decision in Union Carbide India case.

Analysis:
1. The appeals were filed against an order denying Modvat credit on steel crucibles/silicon carbide crucibles and fibre glass filter cloth/mesh, categorized as excluded inputs under Rule 57A by the Commissioner of Central Excise, Chandigarh. The Commissioner (Appeals) upheld the denial, stating these materials were not used in the manufacture of pistons and piston rings, the final products.

2. Rule 57A of Central Excise Rules allows manufacturers to avail credit on duty paid for inputs used in manufacturing final products. The Explanation Clause excludes certain items like apparatus from the definition of "inputs." The Assistant Commissioner considered the fibre glass filter mesh as apparatus due to its role in filtering molten metal to remove impurities, falling under the excluded category.

3. The appellants argued that the filter mesh is essential in the piston casting process to remove oxide inclusions, becoming part of the finished product. Referring to the Larger Bench decision, it was concluded that parts of machines or equipment should not be excluded. The Tribunal held that the filter mesh should be considered an input used in relation to the manufacture of pistons, not as apparatus.

4. Regarding steel/silicon crucibles, their classification as apparatus was challenged due to lack of detailed information on their use in the manufacturing process. The Tribunal referred to definitions of crucibles and decided to remand the issue to the Assistant Commissioner for a fresh determination based on the Union Carbide case, emphasizing the need for detailed particulars and a hearing for the appellants.

5. The appeals were disposed of by ruling that the fibre glass filter mesh should not be considered an excluded input and directing a reassessment of the eligibility of steel/silicon crucibles by the Assistant Commissioner in line with the Union Carbide case. The matter was remanded for further consideration based on the principles outlined in the Larger Bench decision.