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Issues: Whether steel balls used as grinding media in the manufacture of hard ferrites are eligible for MODVAT credit under Rule 57A of the Central Excise Rules, 1944, or are excluded as machinery, equipment, apparatus, appliances or tools.
Analysis: The steel balls were found to be used in the grinding process integral to manufacture, and they corroded and became part of the final product. The process was treated as one in relation to manufacture, because the end product could not be produced without such use. The steel balls were held not to answer the description of machine, machinery, apparatus, appliance or tool merely because they assisted the production process. The authorities distinguishing parts of machines or accessories were held inapplicable on the facts, since the steel balls were not attached to any machine and directly entered the manufacturing stream.
Conclusion: Steel balls used as grinding media were held to be inputs used in or in relation to manufacture and were eligible for MODVAT credit; the Revenue appeals failed and the assessee's appeal succeeded.
Ratio Decidendi: Goods used as an integral and commercially expedient part of the manufacturing process, and which enter the manufacturing stream rather than functioning as machinery or tools, qualify as inputs for MODVAT credit.
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