Modvat credit on repair materials and asbestos packing was upheld for use in plant maintenance and leakage prevention.

Modvat credit was treated as admissible on M.S. angles, H.R. plates, bars and rods, joists, H.R. sheets and asbestos packing where the items were used to repair or replace worn-out parts of tanks, containers, plant and structures, and to prevent leakage or facilitate flow in the manufacturing process. The Tribunal applied earlier decisions recognising credit for similar goods used in expansion and repair work, and found a sufficient nexus between the materials and factory operations. On that basis, the disallowance of credit was held unsustainable.

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Issues: Whether Modvat credit was admissible on M.S. Angles, H.R. Plates, Bars and Rods, Joists, H.R. Sheets and asbestos packing used in the factory for repairing or replacing worn-out parts, and for preventing leakage and facilitating the flow of liquids.

Analysis: The goods in question were used in connection with the factory's plant and structures for repairing or replacing worn-out parts of tanks and containers used for storing or processing raw material and intermediate products. The Tribunal relied on earlier decisions allowing Modvat credit on similar items used in expansion and repair work, as well as on asbestos packing used for sealing and preventing leakage in the manufacturing process. On that basis, the disputed items were treated as having sufficient nexus with the factory's operations to qualify for credit.

Conclusion: Modvat credit was admissible on the disputed goods and the disallowance was unsustainable.

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