Modvat credit on blended HDPE granules upheld where mixed grades were used to make pipes meeting DOT specifications.

Modvat credit on HDPE granules used for manufacturing HDPE pipes supplied to DOT was treated as admissible where the assessee blended Relene E-41003 with other grades of granules in production. Earlier Tribunal rulings had already recognised that such blending could still yield pipes meeting DOT specifications, and no material factual distinction was shown to justify departing from that settled view. On that basis, the Revenue's objection that only one grade of granules was usable was not sustained, and the credit claim stood accepted.

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Issues: Whether modvat credit on HDPE granules was inadmissible on the ground that only one grade of granules could be used in the manufacture of HDPE pipes supplied to DOT, and whether the Revenue's appeal against the order allowing credit was sustainable.

Analysis: The materials on record showed that the assessee manufactured HDPE pipes for DOT and used Relene E-41003 along with other grades of HDPE granules by blending or mixing them in manufacture. The earlier Tribunal decisions relied upon had already held that such blending of different grades could produce pipes conforming to DOT specifications, and no factual distinction was established in the present matter. The Department itself acknowledged blending of Relene E-41003 with other grades, and the Revenue failed to show any basis to depart from the settled view applied in the earlier cases.

Conclusion: The modvat credit was held admissible and the Revenue's challenge failed.

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