MODVAT credit for maintenance inputs extends to welding electrodes and gases used in plant upkeep for manufacture.

Rule 57-A permits MODVAT/CENVAT credit on inputs used not only directly in manufacture, but also in relation to manufacture, whether directly or indirectly and whether or not contained in the final product. On that wide wording, welding electrodes and gases used for repair, maintenance and upkeep of plant and machinery in a cement factory were treated as inputs because their use was connected with the manufacturing process. Credit was therefore available for such maintenance materials for the relevant period.

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Issues: Whether welding electrodes and gases used for repair and maintenance of plant and machinery in a cement factory qualify for MODVAT/CENVAT credit as inputs under Rule 57-A of the Central Excise Rules, 1944.

Analysis: Rule 57-A(4) allows credit not only on inputs used directly in the manufacture of final products but also on inputs used in or in relation to the manufacture of final products, whether directly or indirectly and whether contained in the final product or not. The expression "in relation to" is of wide amplitude. Welding electrodes and gases used for maintenance and upkeep of plant and machinery employed in the manufacture of cement fall within that wider category because such use is connected with the manufacturing process, though indirectly.

Conclusion: The assessee was entitled to MODVAT/CENVAT credit on welding electrodes and gases for the relevant period.

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