Modvat credit eligibility for inputs used in making intermediate mould boxes was upheld for manufacture of castings.

Angles and Channels used to prepare mould boxes for manufacture of castings were treated as eligible inputs for Modvat credit because they were employed in making an intermediate product used in the manufacturing process of the final product. The settled principle applied was that materials used in the manufacture of intermediates, components, sand moulds, furnace linings, or machinery parts can qualify for credit where they form part of the production chain. On that basis, the grant of credit was found proper, and the assessee's claim was accepted.

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Issues: Whether Modvat credit was admissible on Angles and Channels used in the preparation of mould boxes for manufacture of castings.

Analysis: The Angles and Channels were used in the manufacture of mould boxes, and the mould boxes in turn were used for manufacture of castings. Applying the settled principle that inputs used in the manufacture of intermediates or components employed in the manufacturing process qualify for Modvat credit, the cited precedents supported eligibility where materials were used for sand moulds, furnace lining, or machinery components. On that basis, the Commissioner's view granting credit was found to be legal and proper.

Conclusion: The claim for Modvat credit was held admissible and the appeal was rejected, in favour of the assessee.

Ratio Decidendi: Materials used directly in the manufacture of an intermediate product employed in producing the final product are eligible inputs for Modvat credit under Rule 57A.

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