1996 (7) TMI 219 - AT - Central Excise

Tribunal grants Modvat credit for silicon spray, crucial yarn manufacturing input.

The Tribunal ruled in favor of the appellant, allowing the appeal and setting aside the impugned order. It determined that silicon spray, declared under ... Modvat - Silicon spray Issues: Whether silicon spray is a declared input under Rule 57G and whether it is eligible for Modvat credit as an input under Rule 57A or considered a part of machinery/tools.Analysis:1. Issue 1 - Declaration of Silicon Spray: The appellant, engaged in manufacturing Polypropylene Filament Yarn, claimed Modvat credit on inputs including silicon spray. The Department alleged non-declaration of silicon spray under Rule 57G and its ineligibility as an input under Rule 57A. The appellant argued that silicon spray, classified under Tariff Heading 3403.00, was declared in their submission under Rule 57G on 11-8-1992. They presented technical literature showing silicon spray's use in yarn production. The Tribunal examined gate passes describing the product as 'mould release preparation/silicon spray - 3403.00' and the declaration listing it as 'surface active agent - 3403.00.' The Tribunal concluded that silicon spray, being a surface active agent, was covered in the declaration, rejecting the misdeclaration allegation.2. Issue 2 - Classification as Input: The authorities contended that silicon spray was part of machinery/tools, not an input under Rule 57A. The appellant provided technical evidence showing silicon spray's role in providing lubrication essential for manufacturing quality yarn. The Technological Institute of Textile and Sciences confirmed silicon spray's necessity for producing uniform yarn. The Tribunal referenced prior decisions, including Steriware Pvt. Ltd., highlighting silicon spray's significance as an input in manufacturing processes. The Tribunal emphasized that silicon spray's application improved productivity and quality, making it an essential input for the final product. Consequently, the Tribunal ruled in favor of the appellant, allowing the appeal and setting aside the impugned order.3. Conclusion: The Tribunal determined that silicon spray, declared under Rule 57G and crucial for the yarn manufacturing process, qualified as an input under Rule 57A, entitling the appellant to Modvat credit. The judgment underscored the technical and functional importance of silicon spray in enhancing production efficiency and product quality, aligning with previous legal precedents.