Modvat credit on chemicals for sand moulds upheld where the moulds were used to manufacture castings.

Chemicals used to make sand moulds were treated as eligible Modvat inputs where the moulds were used in manufacturing castings. The Tribunal followed its earlier three-member Bench ruling that sand moulds are not goods and that the chemicals were used in the manufacture of castings, so the departmental exclusion for exempted goods or excluded apparatus and appliances did not apply. Credit could not be denied merely because the moulds themselves were exempted. The departmental appeal was rejected and Modvat credit was held admissible.

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Issues: Whether chemicals used in the manufacture of sand moulds were eligible inputs for Modvat credit when the sand moulds were used in the manufacture of castings and the departmental case was that the credit was barred because the sand moulds were exempted goods or excluded apparatus/appliances.

Analysis: The Tribunal followed its earlier three-Member Bench decision holding that sand moulds are not goods and that chemicals used in making sand moulds are used in the manufacture of castings. On that basis, the exclusion suggested by the department did not apply and the credit could not be denied merely because the moulds themselves were exempted.

Conclusion: The departmental appeal was rejected and the credit was held admissible.

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