Modvat credit for grinding media used in cement manufacture is admissible because they are inputs, not machinery parts.

Steel balls or grinding media used in ball mills for cement manufacture qualify as inputs for Modvat credit under Rule 57A because they are essential to the grinding process and are used in relation to manufacture. The Tribunal applied its earlier Larger Bench ruling, holding that these goods are not attached to the machinery and are not parts, components or machinery itself, so they do not fall within the exclusion in the Explanation to Rule 57A. Modvat credit was therefore admissible, and the appeal was disposed of in line with that settled position.

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Issues: Whether steel balls or grinding media used in ball mills for cement manufacture are eligible for Modvat credit as inputs under Rule 57A, or whether they are excluded as parts, components or machinery.

Analysis: The Tribunal followed its earlier Larger Bench ruling that steel balls used in ball mills are essential for the grinding process and are used in or in relation to the manufacture of cement. They are not attached to the machinery, are not components or parts of the ball mill, and do not fall within the exclusion clause in the Explanation to Rule 57A. The Tribunal also treated the earlier Larger Bench view as binding.

Conclusion: Steel balls or grinding media are inputs and Modvat credit is admissible. The appeal was disposed of in accordance with that settled position.

Ratio Decidendi: Goods that are essential for the manufacturing process and are used in relation to manufacture, but are not parts or components of the machinery, qualify as inputs for Modvat credit and are not excluded by the machinery exclusion under Rule 57A.

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