Modvat credit on moulds allowed for job-work manufacturing despite the manufacturer using its own raw materials.

Modvat credit on moulds used in job-work manufacturing was held admissible where the recipient manufactured parts to the assessee's specifications and qualified as a job worker under Rule 57S(8). The Tribunal accepted that credit could not be denied merely because the manufacturer used its own raw materials, relying on earlier precedent treating a similar unit as a job worker despite independent material procurement. The operative point was the functional role of the recipient in the manufacturing arrangement, not ownership of the inputs used in the parts production.

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Issues: Whether Modvat credit on moulds supplied to a manufacturer for use in job-work operations was admissible when the manufacturer of the parts used its own raw materials and was treated as a job worker.

Analysis: Admissibility of credit on the moulds depended on the status of the recipient as a job worker for the purpose of Rule 57S(8). The original authority had denied that status and disallowed credit, but the appellate authority accepted that the parts were manufactured for the assessee's specifications and relied on earlier Tribunal authority recognising a similar manufacturer as a job worker even though it had procured its own raw materials. Following that precedent, the Tribunal held that the credit could not be denied merely because the manufacturer used its own materials.

Conclusion: The mould recipient was a job worker for the purpose of Rule 57S(8), and the Modvat credit on the moulds was admissible.

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