Protective aid in manufacture is not excluded input where it does not itself process or change goods.

Hylam sheets used only as a protective backing during drilling of copper clad laminations were held not to fall within the exclusion in Explanation (i) to Rule 57A of the Central Excise Rules, 1944. The exclusion applies to machines, tools, equipment and similar items that themselves produce, process or change goods in or in relation to manufacture. Because the sheets merely prevented burring and assisted precise drilling without themselves performing any manufacturing or processing function, they were not excluded from the definition of inputs. They were therefore eligible for Modvat credit.

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Issues: Whether Hylam sheets used as protective backing during drilling of copper clad laminations are excluded from the definition of inputs under Rule 57A of the Central Excise Rules, 1944 and therefore ineligible for Modvat credit.

Analysis: The exclusion in Explanation (i) to Rule 57A covers machines, machinery, plant, equipment, apparatus, tools or appliances used for producing or processing goods or for bringing about any change in any substance in or in relation to the manufacture of the final products. The Hylam sheets were used only as a protective cover to prevent burring and to facilitate precise drilling. They did not themselves perform any manufacturing or processing function, nor did they bring about any change in the epoxy sheets being drilled. Since the excluded category applies only to items that themselves perform the specified functions, the Hylam sheets could not be treated as falling within that exclusion.

Conclusion: Hylam sheets are not excluded from the definition of inputs under Rule 57A and are eligible for Modvat credit.

Ratio Decidendi: Material used merely as a protective aid in manufacture, which does not itself produce, process, or change the goods, is not an excluded item under the Modvat input definition.

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