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TMI Blog1996 (7) TMI 216X X X X Extracts X X X X X X X X Extracts X X X X ..... nd cylinder liners. 2. Arguing for the Revenue, the Ld. D.R. submits that Aluminium oxide has no direct usage in or in relation to the final product and is used only in preparing raw materials for the manufacture of final product. In these circumstances, since there is no direct relation with the manufacturing process resulting in the final products, the Modvat credit is not admissible. 3. Arguing for the Respondents, the Ld. Consultant submits that the department itself has been consistently allowing Modvat credit on Aluminium oxide. Aluminium oxide is used in relation [to] the manufacture of final products and enters : the stream of manufacture at the very first stage itself. The final product cannot be manufactured without th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... duct. 4.3 Explaining the meaning of the phrase "in relation to", the Tribunal in case of Andhra Pradesh Paper Mills Ltd. v. C.C.E., reported in 1990 (50) E.L.T. 252 (Tri.) held that the expression "in relation to" has to be read in the context of the manufacturing process of the finished goods covered under the Modvat scheme. There may be processes which are preparatory in nature and anterior to the start of the manufacturing stream of the finished product but which have to be essentially carried out before the actual manufacturing process of the goods can start or these may be related to the preparing of the materials which have ultimately to go into the manufacturing stream or in preparing of certain materials which directly or indi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of paper. Again in case of Indian Explosives Ltd. v. C.C.E.- 1990 (50) E.L.T. 117 it was held that chemicals and resins used for water treatment and then for manufacture of steam which was used for drying paper, were also eligible for Modvat credit, since the production of steam is connected or integrated process in the manufacture of paper. 5. It was admitted by the Ld. D.R. that in removing the impurities from the scraps Aluminium Oxide is mixed with the scrap and impurities are removed through chemical reaction. In view of this there can be no doubt that Aluminium Oxide does enter the stream of manufacture and can be held to be used in or in relation to the manufacture of the final products. 6. I, therefore, reject the Reven ..... X X X X Extracts X X X X X X X X Extracts X X X X
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