Modvat credit on refractory bricks used in furnace lining treated as admissible input for manufacture.

Modvat credit under Rule 57A was admissible on refractory bricks used as constructional material for lining a furnace and forming an essential part of it. Rule 57A allows credit on duty-paid inputs used in or in relation to manufacture, directly or indirectly, while Rule 57B excludes machines, equipment, tools and capital goods. The bricks were treated as inputs used in relation to manufacture, not as machinery or capital goods, and the assessee was entitled to credit on that basis.

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Issues: Whether modvat credit under Rule 57A of the Central Excise Rules, 1944 was admissible on refractory bricks used as constructional material in lining the furnace and forming an essential part of the furnace.

Analysis: Rule 57A permits credit on specified duty paid on inputs used in or in relation to the manufacture of final products, whether directly or indirectly and whether contained in the final product or not. Rule 57B excludes machines, machinery, equipment, apparatus, tools, appliances and capital goods, but the material in question was treated as an input used in relation to manufacture and not as machinery or capital goods. The credit entitlement was also supported by the settled view that materials used in the manufacture of final products qualify as inputs for modvat purposes.

Conclusion: The assessee was entitled to modvat credit on the refractory bricks.

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