1997 (12) TMI 252 - AT - Central Excise

Summary

Issues:
1. Determination of whether certain goods qualify as "inputs" under Rule 57A.
2. Assessment of whether the goods fall within the category of excluded inputs.

Analysis:
The judgment by the Appellate Tribunal CEGAT, Mumbai, involved the interpretation of whether specific goods should be considered "inputs" under Rule 57A and if they fall within the excluded category. The Commissioners (Appeals) previously ruled that the goods fell within the excluded category, leading to a dispute regarding the demand. The appellant contended that the goods, such as Hytherm 500 oil, were essential for the manufacturing process, specifically in the degreasing of cold rolled steel strips. The departmental representative argued against this, stating that the goods had no direct or indirect relation to the final product's manufacture.

The Tribunal considered an amendment to Rule 57A in June 1995, which broadened the definition of inputs to include goods used directly or indirectly in relation to the manufacture of final products. Despite doubts regarding the direct use of the goods in the manufacturing process, the Tribunal acknowledged that the scope of "inputs" encompassed goods indirectly related to the final product's manufacture. The Tribunal highlighted a previous case where chemicals used in sand mould preparation were deemed inputs for casting manufacture, emphasizing the broad interpretation of "in relation to the manufacture."

Regarding Appeal E/947, the goods were deemed to qualify as inputs even before the rule amendment due to their indirect relation to the final product's manufacture. The Tribunal emphasized that the goods did not fall within the exclusion clause and thus, the duty paid on these inputs was eligible for credit.

The judgment also addressed the usage of Enklo 46 oil for hydraulic machinery, lubricating oils, resins, and cooling liquids. It referenced precedents to establish that these goods were essential for machinery operation and maintenance, qualifying them as inputs. The Tribunal rejected the departmental representative's argument that these goods were not directly required for finished product manufacturing, emphasizing their essential role in machinery operation.

Ultimately, the Tribunal allowed the appeals, set aside the impugned orders, and granted consequential relief, affirming the classification of the goods as inputs eligible for duty credit.