1997 (3) TMI 196 - AT - Central Excise

Summary

Issues:
1. Whether the `Infusion Set' cleared along with the finished goods `Lomodex' is admissible for Modvat credit.
2. Interpretation of the term "inputs" for the purpose of admissibility of Modvat credit under rule 57A of the Central Excise Rules, 1944.

Analysis:
1. The lower appellate authority allowed Modvat credit on the `Infusion Set' cleared along with the finished goods `Lomodex' based on the argument that the set has become a component of the final product and is sold at a package cost that includes the value of the set. The authority also cited a previous case where Modvat credit was allowed on a similar component. The appellate tribunal upheld this decision, stating that the set is an integral part of the goods sold and thus qualifies for the credit. The tribunal distinguished this case from a previous judgment regarding "Tool kits" where the kits were not considered inputs as they were supplied only on customer request, unlike the present scenario where the `Infusion Set' is supplied with all goods sold. Therefore, the tribunal dismissed the Revenue's appeal, affirming the admissibility of Modvat credit for the `Infusion Set.'

2. The Revenue contended that the `Infusion Set' should not be considered an input for Modvat credit as it does not go into the manufacture of the final product `Lomodex.' The Revenue relied on a Patna High Court judgment regarding "Tool kits" supplied with motor vehicle chassis, which were deemed tools and excluded from the definition of inputs. However, the tribunal distinguished this case by highlighting that the `Infusion Set' in question is an integral part of the goods sold, unlike the scenario in the Patna High Court judgment. The tribunal emphasized that the set is supplied with all goods and is not an optional addition like the tool kits in the Patna case. Therefore, the tribunal concluded that the `Infusion Set' qualifies as an input for Modvat credit under the given circumstances, rejecting the Revenue's appeal based on the Patna High Court's judgment.

This judgment clarifies the admissibility of Modvat credit for the `Infusion Set' cleared along with the finished goods `Lomodex' and interprets the term "inputs" in the context of Central Excise Rules, 1944. The tribunal's decision is based on the set's integral role in the final product and its inclusion in the package cost, distinguishing it from a previous case involving tool kits.