Modvat credit for grinding wheels upheld because replaceable parts are not excluded tools or apparatus under Rule 57A.

Grinding wheels used in the manufacture of iron and steel qualified for Modvat credit under Rule 57A because they were used in or in relation to manufacture and were not excluded as tools, apparatus or equipment. The exclusion in the Rule applies only to complete self-contained units capable of independent functioning, not to replaceable parts of grinding machines. Tariff classification and chapter notes did not change that position, since classification as a tool for tariff purposes did not make the item a complete unit for the exclusion clause.

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Issues: Whether grinding wheels used in the manufacture of iron and steel are eligible for Modvat credit under Rule 57A of the Central Excise Rules, 1944, or are excluded as tools, apparatus or equipment.

Analysis: The use of grinding wheels in or in relation to manufacture was not in dispute. The decisive question was whether they fell within the exclusion in the explanation to Rule 57A. The exclusion applies to machines, machinery, plant, equipment, apparatus, tools or appliances, which are self-contained, complete units capable of independent functioning, and not to parts of such units. Grinding wheels were found to be replaceable parts of grinding machines and not independent tools or apparatus. The reference to tariff classification and chapter notes did not alter this position, because classification as a tool for tariff purposes did not make the item a complete unit for the exclusion clause. The item also satisfied the main requirement of being used in relation to manufacture.

Conclusion: Grinding wheels are eligible for Modvat credit under Rule 57A and do not fall within the exclusion clause.

Ratio Decidendi: For Rule 57A, the exclusion of machines, machinery, plant, equipment, apparatus, tools or appliances applies only to complete self-contained units and not to replaceable parts used in or in relation to manufacture.

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