Modvat credit on release paper allowed where repeated use did not make it an apparatus or excluded item.

Release paper used to transfer plastisol onto fabric and impart the required finish in coated leather fabric manufacture was treated as an eligible Modvat input under Rule 57A. Its repeated use four to five times did not make it an apparatus, instrument, or conveyor-like device, because it still performed a necessary manufacturing role and contributed to the end product. On that reasoning, repeat usability alone did not exclude it from input credit, and Modvat credit was available.

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Issues: Whether release paper used in the manufacture of coated leather fabrics was an eligible input for Modvat credit under Rule 57A, or whether its function and repeated usability made it an apparatus, instrument, or otherwise excluded item.

Analysis: The release paper was used to transfer plastisol onto the fabric and to impart the required finish, which did not make it a conveyor belt or a device for carrying material from one place to another. Its capability of being used four to five times did not, by itself, convert it into an apparatus or instrument or take it outside the ambit of input. The material performed a necessary role in the manufacture and, on the reasoning accepted in earlier Tribunal decisions, a repeated-use medium that contributes to the end product is not excluded merely for that reason.

Conclusion: The release paper was held to be an eligible input and Modvat credit was available to the assessee.

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