1998 (3) TMI 324 - AT - Central Excise

Summary

Issues:
Admissibility of Modvat credit for lubricating oil used in the manufacture of brass strips and foils.

Analysis:
The appeal before the Appellate Tribunal CEGAT, New Delhi involved the determination of whether Modvat credit would be admissible for lubricating oil used in the process of manufacturing brass strips and foils. The appellant, engaged in the manufacture of copper alloys strips and foils, used lubricating oil in the rolling mill for the continuous rolling process. The department contended that Modvat credit was not admissible as the lubricating oil was not directly related to the manufacture of brass strips and foils. The Collector (Appeals) upheld the respondent's view, leading to the department filing the present appeal.

The appellant argued that their case aligned with a previous Tribunal decision in the case of Kanoria Sugar & General Mfg. Co. Ltd., emphasizing the essentiality of inputs for the manufacture of a final product to determine admissibility under Rule 57A. The respondent, on the other hand, highlighted their use of lubricating oil in preventing defects during the rolling process, citing the Tribunal's decision in Pragati Paper Mills (P) Ltd. and the Larger Bench decision in Shri Ramakrishna Steel Industries to support their position.

After considering the submissions, the Tribunal found that the lubricating oil was indeed used in the manufacturing process to prevent defects in the brass sheets during rolling. Referring to para 14 of the Larger Bench decision, which clarified the broader concept of "in relation to the manufacture" of a final product, the Tribunal concluded that the lubricating oil qualified as an input under Rule 57A. By applying the ratio from the Larger Bench judgment, the Tribunal upheld the admissibility of Modvat credit for the lubricating oil used in the manufacture of brass strips and foils. Consequently, the impugned order was upheld, and the appeal was rejected.