Modvat credit on furnace lining material denied where the item was used for repair and maintenance, not manufacture.

Ramming Mass used for coating bricks and lining a furnace after each heat was treated as material used for repair and maintenance of the manufacturing apparatus, not as an input used in or in relation to the manufacture of steel. The relevant test was whether the item entered the manufacturing process itself, as distinct from use in the furnace or its upkeep. Because the goods were applied to maintain and repair the furnace's inner surface, they fell outside Rule 57A of the Central Excise Rules, 1944. Modvat credit was therefore not admissible.

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Issues: Whether Ramming Mass used for lining and maintenance of the furnace qualified as an input used in or in relation to the manufacture of steel so as to entitle the assessee to Modvat credit under Rule 57A of the Central Excise Rules, 1944.

Analysis: The relevant test is whether the goods are used in the manufacturing process, as distinct from use in the manufacturing apparatus. Goods used in or in relation to manufacture may qualify as inputs, but items that are part of the furnace or are used for repair, maintenance, or lining of the apparatus do not. Ramming Mass was found to be used for coating bricks and lining the furnace after each heat, i.e. for maintaining the furnace and repairing its inner surface, and not in the process of producing steel. It therefore fell outside the scope of input under Rule 57A.

Conclusion: The claim for Modvat credit was not admissible, and the issue was decided against the assessee.

Ratio Decidendi: Material used for repair or maintenance of manufacturing apparatus, rather than in the manufacturing process itself, is not an input for Modvat credit under Rule 57A.

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