1997 (9) TMI 314 - AT - Central Excise

Summary

Issues:
Grant of modvat credit in respect of certain inputs used in the manufacture of the notified finished product.

Analysis:
The appeal before the Appellate Tribunal CEGAT, MADRAS involved the grant of modvat credit for specific inputs used in the manufacturing process of a notified finished product. The appellant's consultant presented three items for which modvat credit was sought: Aluminium Oxide, Iva Plast, and Ferro Phosphorous. The consultant provided detailed descriptions of each item to support the claim for modvat credit.

The first item, Aluminium Oxide, was described as an abrasive powder used in preparing surfaces for chrome plating. It was highlighted that this process was crucial for achieving a uniform surface finish, removing corrosion and uneven surfaces, and ensuring proper adhesion of chrome during plating. The second item, Iva Plast, was identified as a refractory insulating material used as a releasing agent in the manufacturing process to prevent damage to metallic surfaces during casting. The third item, Ferro Phosphorous, was explained as a raw material used in conjunction with other alloying elements to regulate phosphorous content and enhance wear resistance in the manufacture of C.I. Rings.

During the proceedings, the JDR for the department supported the lower appellate authority's reasoning but acknowledged the potential eligibility for modvat credit if Ferro Phosphorous was verified to be an alloying agent. The Tribunal carefully considered the arguments presented by both sides and examined the technical necessity of using Iva Plast and Aluminium Oxide in different stages of the manufacturing process for the finished product. Based on the uncontested information provided and the technical requirements outlined in the write-up, the Tribunal concluded that the appellants were entitled to the benefit of modvat credit for these items. However, regarding Ferro Phosphorous, as no specific findings were entered by the lower authority, the Tribunal remanded the matter for verification of its use to determine eligibility for modvat credit.

In conclusion, the Appellate Tribunal CEGAT, MADRAS allowed the appeals in favor of the appellants concerning the grant of modvat credit for Aluminium Oxide and Iva Plast based on their technical necessity in the manufacturing process. For Ferro Phosphorous, the matter was remanded to the original authority for verification, with the possibility of eligibility for modvat credit if its use aligned with the technical requirements outlined in the write-up.