1997 (4) TMI 196 - AT - Central Excise

Summary

Issues: Challenge to denial of Modvat credit on synthetic filter cloth and asbestos millboard.

In this case, the appellants challenged the order of the Collector (Appeals) denying Modvat credit on synthetic filter cloth and asbestos millboard. The appellants, manufacturers of aluminum products, claimed that these inputs were essential for the manufacturing process. They argued that synthetic filter cloth was used in various filtration processes crucial for manufacturing aluminum, supported by references to chemical technology encyclopedias. Asbestos millboard, used for continuous casting of aluminum billets, was also deemed essential by the appellants. The Respondent Commissioner reiterated the lower authorities' findings denying the Modvat credit.

The Assistant Collector and the Collector (Appeals) had previously held that the appellants were not eligible for Modvat credit on synthetic filter cloth and asbestos millboard. However, the appellants' counsel cited recent Tribunal decisions and the Apex Court's ruling in IFFCO v. Collector of Central Excise to support their claim. The Tribunal, in a previous order, had observed that if an input is used directly or indirectly in the manufacturing process, the Modvat facility cannot be denied. The Tribunal also referenced cases involving similar items like glass filter cloth to support the appellants' claim for Modvat credit on synthetic filter cloth.

Regarding asbestos millboard, the appellants argued that it was essential for the flow of metal during the manufacturing process. The lower authorities had categorized the orifice plate made of asbestos millboard as part of machinery, not an input. However, the appellants contended that the consumable nature of the orifice plate made it more akin to an input. Citing the broad interpretation of "in or in relation to" by the Apex Court in IFFCO, the Tribunal found merit in the appellants' claim for Modvat credit on asbestos millboard as well.

Ultimately, the Tribunal allowed the appeal, setting aside the impugned order and granting consequential relief to the appellants as permissible under the law.