Modvat credit on cleaning chemicals used for machinery maintenance was held admissible as inputs related to manufacture.

Hydrochloric acid and wetnol used for cleaning machinery in the factory qualify as inputs used in relation to manufacture under Rule 57A of the Central Excise Rules. The expression was applied broadly to cover goods not forming part of the finished product but used in activities connected with production, and earlier decisions allowing credit for cleaning or maintenance items were followed. Modvat credit was therefore admissible in favour of the assessee, and the contrary view taken earlier in the assessee's own case was treated as overruled.

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Issues: Whether hydrochloric acid and wetnol used for cleaning machinery in the factory are eligible for Modvat credit under Rule 57A of the Central Excise Rules.

Analysis: The scope of the expression "used in relation to the manufacture" was treated as wide enough to cover goods that do not become part of the finished product but are used in activities concerned with or pertaining to manufacture. The reasoning relied on the Larger Bench view that inputs include goods used in relation to manufacture, and on earlier decisions allowing credit for items used to clean or maintain machinery engaged in production. The earlier contrary view in the assessee's own case had already been overruled.

Conclusion: Hydrochloric acid and wetnol used for cleaning machinery are eligible inputs and Modvat credit is admissible in favour of the assessee.

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