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TMI Blog1994 (5) TMI 101X X X X Extracts X X X X X X X X Extracts X X X X ..... m Division disallowing Modvat Credit on certain inputs, namely, Lacquer Disc, Solid Nickel, PVC Compound, Nickel Anode, Nickel Sulphamate and Sulphuric Acid on the ground that these were used for the manufacture of matrices exempt from duty. It was held that these matrices were final products in their own right and not intermediate goods within the meaning of Rule 57D of the Central Excise Rules. Besides disallowing the credit not utilised and ordering recovery where credit had already been utilised, penalty of Rs. 25,000/- was also imposed by the Assistant Collector. 2. The Appeal was argued before us by Shri R.N. Dutta, learned Chartered Accountant and Shri B. Saha, learned Advocate, on behalf of the Appellants. Shri Dutta explained tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Cotton Spg. Wvg. Mills Co. Ltd. v. S.T.O., reported in 16 STC 563 and the Tribunal decision in Mettur Chemical Industrial Corporation Ltd. v. Collector of Central Excise, reported in 1991 (52) E.L.T. 592. In the present case, producing the matrices is essential for the emergence of the final product. The music is first recorded in the matrix which is then used to produce the records. In the Harmonised Commodity Description and Coding System, matrices are referred to as recorded media constituting intermediate products in the manufacture of commercial records. Matrices are not used in relation to the machine but used in the manufacture of records, their final product. In fact, the matrix which contains the recording is not a tool or appl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the manufacturing process. It converts such material to the required form or composition. Here, the matrix contains the recorded sound and is used for transfer of the same to the records. After such transfers are made to a number of records, the recording in the matrix which gradually gets used up loses its utility and is to be discarded. That way, it is more of a raw material than a tool or equipment. The case is squarely covered by Rule 57D(2). The inputs in question are used in the preparation of the matrix. Matrices are, as stated by Shri Dutta, defined in the Harmonised System under Heading 85.24 as recorded media constituting intermediate products in the manufacture of commercial records. We find that there are a few Tribunal decisi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stated in the report. It was held by the West Regional Bench that the release paper does not merely act as a release agent but also transfers some materials to the final product and transfer of these materials is necessary for obtaining the end-product and in that way some part is also getting into the product stream of the final product. Accordingly, they did not accept the stand of Revenue that Release Paper is an apparatus or appliance. 6. The above decisions cover situations which are quite similar to the present case. Following the said decisions the present Appeal would merit acceptance. 7. In view of the manner of use of the inputs and of the matrices as discussed, we do not agree with the finding of the Collector (Appeals) that ..... X X X X Extracts X X X X X X X X Extracts X X X X
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