Modvat credit on manufacturing consumables allowed, including graphite spray treated as an eligible input rather than machinery part.

Modvat credit was held admissible on disputed consumables used in aluminium manufacture. For items other than Aquagraph 77, the earlier decision in the appellants' own matter was followed, and credit was allowed. Aquagraph 77, a water-based colloidal graphite sprayed on castor rolls to prevent sticking and aid casting, was treated as an essential consumable used in relation to manufacture, not as an appliance, device, or part of machinery excluded by the explanation to Rule 57A. The orders denying credit were set aside and the appeals were allowed with consequential relief.

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Issues: Whether Modvat credit was admissible on the disputed items used in the manufacture of aluminium products, including whether Aquagraph 77 constituted an input or was excluded as an appliance, device, or part of machinery.

Analysis: The disputed items, other than Aquagraph 77, had already been held eligible for Modvat credit in the appellants' own earlier matter, and that ratio was followed. As to Aquagraph 77, it was found to be a water-based colloidal graphite sprayed on castor rolls to prevent sticking of aluminium strips and to facilitate the casting process. It was treated as an essential consumable used in relation to manufacture and not as an appliance, device, or part of machinery excluded by the explanation to Rule 57A of the Central Excise Rules.

Conclusion: Modvat credit was admissible on all the disputed items, including Aquagraph 77.

Final Conclusion: The orders denying credit were set aside and the appeals were allowed with consequential relief according to law.

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