1998 (12) TMI 267 - AT - Central Excise

Summary

Issues:
1. Whether chromic acid and trichloro-ethylene are to be considered as inputs for degreasing operation and chrome plating.
2. Whether Modvat credit can be allowed for the use of chromic acid and trichloro-ethylene in the manufacturing process.
3. Whether the inputs are used in or in relation to the manufacture of the final product.

Analysis:
1. The main issue in this case revolves around the classification of chromic acid and trichloro-ethylene as inputs for degreasing operation and chrome plating. The Commissioner held that these chemicals are essential for the manufacturing process, with chromic acid being used for chrome plating of piston rings to provide wear resistance and trichloro-ethylene for degreasing the rings. The Commissioner's finding emphasized the technical necessity of these chemicals in the manufacturing process.

2. The contention from the Revenue was that the inputs are used only for surface treatment and, therefore, should not be eligible for Modvat credit. However, the Consultant for the Respondent argued that the Bench had previously ruled in their own case that chromic acid and trichloro-ethylene are indeed inputs in the manufacturing process of piston rings. The Consultant referred to a previous order where Modvat credit was allowed for similar materials used in manufacturing.

3. The Tribunal, after careful consideration, noted that the use of chromic acid and trichloro-ethylene in the manufacturing process of piston rings was crucial and technical in nature. The Tribunal referred to previous decisions where Modvat credit was allowed for materials used in the manufacturing process to make the final product marketable. The Tribunal upheld the decision that the inputs were used in relation to the manufacture of the final product, making them eligible for Modvat credit. The Tribunal dismissed the Revenue's appeal based on the precedent set in previous cases and the technical necessity of the inputs in the manufacturing process.

In conclusion, the judgment upheld the classification of chromic acid and trichloro-ethylene as inputs for the manufacturing process of piston rings, making them eligible for Modvat credit. The decision was based on the technical necessity of these chemicals in the manufacturing process and previous rulings allowing Modvat credit for similar materials used in manufacturing.