Modvat credit under Rule 57A: exclusion of machine parts as inputs raised a referable question of law.

The Tribunal considered the scope of Modvat credit under Rule 57A of the Central Excise Rules, 1944, focusing on whether Dryer Press felt and Phosphor Bronze metallic wire, used in relation to manufacture, were excluded as inputs under clause (i) of the Explanation. It found that the proposed reference questions were not correctly framed, but held that the real controversy still raised a referable question of law. A statement of case was directed to be drawn up and the matter was referred to the High Court on the modified question.

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Issues: Whether a question of law arose from the Tribunal's order so as to warrant reference to the High Court under Section 35G of the Central Excise Act, 1944, and whether the proposed question required modification.

Analysis: The Tribunal examined the scope of Rule 57A of the Central Excise Rules, 1944 and the exclusion in clause (i) of its Explanation in the context of Modvat credit on Dryer Press felt and Phosphor Bronze metallic wire. It noted that the suggested questions were not accurately framed and that the real controversy was whether parts of machines, found to be used in relation to manufacture, were nevertheless excluded from the definition of input by the said exclusion clause. On that basis, it held that a referable question of law did arise from the order.

Conclusion: The reference was ordered, a statement of case was directed to be drawn up, and the matter was referred to the High Court on the modified question.

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