Modvat credit on grinding wheels upheld as necessary inputs, with no substantial question of law arising for reference.

Modvat credit on grinding wheels was treated as admissible because the appellate authorities found them to be necessary inputs used in relation to manufacture, and no material was produced to displace that finding. On that basis, the controversy was held not to raise any substantial question of law for reference under the Central Excise Act, so the reference petition was not maintainable and the Revenue's challenge failed. The allowance of credit on grinding wheels was therefore left undisturbed.

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Issues: Whether Modvat credit on grinding wheels was admissible as inputs under Rule 57A of the Central Excise Rules, 1944, and whether any substantial question of law arose for reference under Section 35H(1) of the Central Excise Act, 1944.

Analysis: The finding of the appellate authorities was that the grinding wheel constituted a necessary input used in relation to the manufacture of the final product. No material was shown to displace that finding. The amount involved was also insignificant, and on that basis the Court found that the controversy did not raise any substantial question of law warranting consideration in reference jurisdiction.

Conclusion: The reference petition was not maintainable on the ground urged, and the Revenue's challenge failed.

Final Conclusion: The order leaves intact the allowance of Modvat credit on grinding wheels and brings the reference proceedings to an end.

Ratio Decidendi: A finding that an item is a necessary input used in relation to manufacture, when unshaken on the record, does not give rise to a substantial question of law for reference.

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