Modvat credit on testing materials denied where plastics were used only for machine performance checks, not manufacture.

Plastic materials used only for testing the performance of manufactured machines were treated as ineligible for Modvat credit because testing was not part of the manufacturing process. On that basis, the credit claim failed since the materials did not qualify as inputs used in manufacture. The claim was also unsupported by any stay of the High Court order relied upon by the Revenue, reinforcing the denial. The issue was decided against the assessee and the Modvat credit claim was rejected.

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Issues: Whether plastic materials used for testing the performance of machines manufactured by the assessee qualified as inputs for Modvat credit.

Analysis: The denial of credit was upheld on the basis that testing of the performance of manufactured machines is not part of the manufacturing process. Since the materials were used only for such testing, they did not satisfy the requirement of being inputs eligible for Modvat credit. The appeal was also not supported by any stay of the High Court order relied upon by the Revenue.

Conclusion: The claim for Modvat credit on the plastic materials was rejected and the issue was decided against the assessee.

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