2000 (7) TMI 774 - AT - Central Excise

Summary

Issues Involved:
1. Entitlement to Modvat credit for lubricating oils and greases.
2. Modvat credit eligibility for cables and cable wires.
3. Modvat credit eligibility for Roll Tyre Secondary Crusher and C.I. Slag Box.

Detailed Analysis:

1. Entitlement to Modvat Credit for Lubricating Oils and Greases:
The primary issue in these appeals is whether the assessee is entitled to the benefit of Modvat credit for inputs like lubricating oils and greases used for lubricating machinery involved in manufacturing the final product. The Revenue had denied this benefit, while the Larger Bench of the Tribunal in CCE, Meerut v. Modi Rubber Ltd. had previously addressed this issue.

The Tribunal noted that lubricants are essential for the smooth operation of machinery, preventing damage from friction and heat, and are thus integrally connected with the manufacturing process. The Tribunal affirmed that lubricants qualify as "inputs" under Rule 57A, following the decision in Union Carbide India Ltd., and rejected contrary views from Kanoria Sugar & General Mfg. Co. Ltd. The Tribunal emphasized that the definition of "inputs" under Rule 57A includes essential items used in or in relation to the manufacture, regardless of their direct or indirect use.

2. Modvat Credit Eligibility for Cables and Cable Wires:
In appeal No. E/1933/98, the Revenue challenged the grant of Modvat credit for cables and cable wires. This issue was resolved in favor of the assessee, referencing the judgment in Jawahar Mills, which supported the eligibility of such items for Modvat credit. Consequently, the Revenue's claim was rejected, reaffirming that these items qualify for Modvat credit.

3. Modvat Credit Eligibility for Roll Tyre Secondary Crusher and C.I. Slag Box:
The Revenue also contested the Modvat credit for Roll Tyre Secondary Crusher and C.I. Slag Box. The Commissioner had noted that the C.I. Slag Box is used in the manufacturing process, making it eligible for Modvat credit under Rule 57Q as it constitutes apparatus/accessories essential for production. The Tribunal upheld this view, rejecting the Revenue's argument that these items were not included in the definition of capital goods.

The assessee cited decisions in Leader Engineering Works and M/s. Rock Stone Industries, which supported the extension of Modvat credit to similar items. The Tribunal found the manufacturing process and cited precedents persuasive, thus confirming the Commissioner's decision and rejecting the Revenue's claim.

Conclusion:
The Tribunal concluded that the issue of Modvat credit for lubricating oils and greases is no longer res integra, extending the benefit to the assessee for the period up to 1-3-1997. The Tribunal granted stays and disposed of all related appeals accordingly, favoring the assessee based on the Larger Bench's judgment. The Revenue's appeals were rejected, and the assessee's claims were upheld in light of established legal precedents. The appeals were disposed of with the assessees succeeding to the extent indicated in their appeals, and the Revenue's claims were consistently rejected.