2001 (2) TMI 477 - AT - Central Excise

Summary

Issues:
Availability of modvat credit under Rule 57A of the Central Excise Rules for Tungsten Wire and Triethylene Glycol used in manufacturing.

Analysis:
The appeal raised the issue of whether modvat credit under Rule 57A is available for Tungsten Wire and Triethylene Glycol used in manufacturing. The Revenue argued that Tungsten Wire is akin to Machine/Tools/Accessories and, therefore, excluded from the definition of inputs under Rule 57A. They cited the functional utility of the item as a relevant consideration. Similarly, they contended that Triethylene Glycol is not used in the manufacture of the final product but for maintaining machinery. On the contrary, the Respondent argued that modvat credit had been allowed in their own case previously and relied on previous decisions supporting their claim. The Adjudication Order detailed the essential role of both inputs in the manufacturing process, emphasizing their direct connection to the final product.

The Tribunal analyzed the manner in which both inputs were utilized in the manufacturing process. It was observed that Tungsten Wire played a crucial role in the film-making process by enabling proper casting of molten polymer. Similarly, Triethylene Glycol was essential for cleaning the filter during the conversion of melt polymer into polyester film. The Tribunal concluded that both inputs were used in or in relation to the manufacture of the final product, making them eligible for modvat credit. The decision of the Karnataka High Court regarding the denial of modvat credit for products treated as part of machinery was distinguished from the present case.

Furthermore, the Tribunal referenced its own previous decisions where modvat credit had been allowed for Triethylene Glycol, emphasizing its importance in the manufacturing process. The Tribunal rejected the Revenue's appeals based on the established usage and significance of the inputs in the manufacturing process. The decision highlighted the essential nature of inputs for the smooth functioning of machinery and the manufacturing process, regardless of whether they were directly part of the machinery or used for its operation. The Tribunal's decision was in line with previous rulings and established principles governing modvat credit eligibility, ultimately upholding the Respondent's claim for modvat credit for Tungsten Wire and Triethylene Glycol.