Modvat input classification for interleaving kraft paper raised a referable question of law under Rule 57A.

Interleaving kraft paper used in the manufacture of stainless steel strips was treated as raising a legal question on whether it qualified as an input used in or in relation to manufacture under Rule 57A of the Central Excise Rules, 1944. The Tribunal noted that the issue was analogous to earlier Modvat credit rulings and required examination of whether the item fell within the scope of input and whether it was excluded by the explanation to Rule 57A. It held that the controversy was not purely factual and that questions of law arose for reference; the reference application was allowed and the questions were referred as prayed for.

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Issues: Whether interleaving kraft paper used during the manufacture of stainless steel strips was an input used in or in relation to manufacture under Rule 57A of the Central Excise Rules, 1944 so as to give rise to questions of law for reference.

Analysis: The material placed before the Tribunal showed that the use of interleaving kraft paper was similar to the use of materials already considered by another Bench in the context of Modvat credit. The Tribunal accepted that the earlier reasoning supported the view that the item required legal consideration on whether it fell within the scope of input and whether it was excluded by the explanation to Rule 57A. On that basis, it held that the controversy was not purely factual and that questions of law arose for reference.

Conclusion: The reference application was allowed and the questions were referred as prayed for.

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