Modvat credit for post-manufacture testing materials denied where inputs were used only to test finished machines before supply.

Materials used only after manufacture to test finished machines before supply were not treated as inputs eligible for Modvat credit under Rule 57A, because they were not used in or in relation to manufacture of the finished product. The Tribunal distinguished the cited authorities on facts, noting that they concerned different factual settings involving wrapping material or testing materials used to meet buyer specifications. It also held that the dispute turned on fact-specific application of settled principles and did not raise any referable question of law under Section 35G(1).

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Issues: Whether the materials used for testing finished machines could be treated as inputs eligible for Modvat credit, and whether the application disclosed any question of law warranting reference to the High Court under Section 35G(1).

Analysis: The Tribunal examined Rule 57A and the nature of the disputed materials, and found that the inputs were used only after the machine had been manufactured, for testing its performance before supply to the customer. On that footing, the materials were not used in or in relation to the manufacture of the finished product. The cited decisions were distinguished on facts because they involved wrapping material forming part of the marketed product or testing materials used to meet buyer specifications in a different factual setting. The Tribunal further held that the controversy raised no disputable question of law, but only a fact-specific application of settled principles to the record.

Conclusion: The claim that the testing materials were eligible inputs was not accepted, and no referable question of law arose.

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