Modvat credit for machine parts upheld where rollers and ceramic boards were not covered by the Rule 57A exclusion.

Modvat credit was held admissible on engraved rollers and ceramic boards used as parts of machines under Rule 57A, because a larger Bench had already held that machine parts do not fall within exclusion clause (i) of the Explanation to that rule. The lower authorities' view that the goods were excluded machine parts could not be sustained, and the disallowance of credit was therefore unsustainable.

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Issues: Whether Modvat credit was admissible on engraved rollers and ceramic boards used in the manufacturing process as parts of machines under Rule 57A of the Central Excise Rules, 1944.

Analysis: The larger Bench had already held that parts of machines do not fall within exclusion clause (i) of the Explanation to Rule 57A and that Modvat credit is available in respect of such parts. The articles in question were treated by the lower authorities as machine parts falling within the exclusion clause, but that view could not be sustained in light of the larger Bench decision.

Conclusion: Modvat credit was admissible on the disputed articles, and the disallowance of credit was unsustainable.

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