Modvat credit for machinery parts confirmed where exclusion clause applies only to complete machines, not individual components.

Rule 57A Modvat credit was available for parts of machinery and coated abrasive/aloxide paper belt metalite because the exclusion clause applies to full, self-contained units such as machinery, apparatus, appliance, equipment, plant and tool, not to mere parts of those items. Goods used as machine parts or for finishing and smoothing work were not disqualified simply by their connection with machinery. The reasoning followed the Larger Bench view that the excluded expressions denote complete units, and a part of a machine is not itself an excluded appliance or equipment. On that basis, the goods were treated as eligible inputs for Modvat credit.

---

---

Issues: Whether parts of machinery and coated abrasive/aloxide paper belt metalite were eligible for Modvat credit as inputs under Rule 57A of the Central Excise Rules, or were excluded as machinery-related items falling within the exclusion clause.

Analysis: The deciding principle applied was that the exclusion clause in Rule 57A covers full and complete assemblages such as machine, machinery, apparatus, appliance, equipment, plant and tool, and not mere parts of such units. On that footing, items used as parts of machinery, or used with the machine for finishing and smoothing work, do not lose eligibility merely because they are connected with the machinery. The reasoning followed the Larger Bench view that the relevant expressions in the exclusion clause denote self-contained and complete units, and that a part of a machine is not an appliance or other excluded item.

Conclusion: The goods in question were held eligible for Modvat credit as inputs, and the appeals were disposed of in accordance with that view.

---