Modvat credit on hydraulic jack with transformers upheld as an essential item used in manufacture-related maintenance.

Modvat credit on a hydraulic jack supplied with power transformers was found admissible because the jack was used to lift the transformer tank for movement during oil changing and fault-related maintenance, making it an essential item supplied with the transformers. The Tribunal applied the Larger Bench ruling in Bajaj Auto Ltd. on credit for kits and distinguished Daewoo Motors India Ltd. as dealing with assessable value rather than Modvat credit. On that basis, the jack was treated as an input used in relation to manufacture, and the Revenue's challenge failed.

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Issues: Whether Modvat credit was admissible on the hydraulic jack supplied with power transformers as an input used in relation to manufacture.

Analysis: The hydraulic jack was found to be supplied with each transformer and to be used for lifting the transformer tank for movement on rails during oil changing in the event of a fault. The Tribunal noted that the Commissioner (Appeals) had relied on the Larger Bench decision in Bajaj Auto Ltd., which had allowed credit on kits. The contrary decision in Daewoo Motors India Ltd. was distinguished on the basis that it dealt with inclusion of tool kits in assessable value and not with the credit issue in the present facts. The item was treated as an essential component supplied along with the transformers, and the Larger Bench ruling was held to govern the dispute.

Conclusion: Modvat credit on the hydraulic jack was held admissible and the Revenue's challenge failed.

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