Refractory bricks used in furnace lining were not inputs for Modvat credit and were treated as manufacturing apparatus.

Refractory bricks used to line an electric arc furnace were treated as constructional materials for the furnace, not as inputs consumed in or in relation to the manufacture of iron and steel products. Earlier decisions classifying refractories as part of the manufacturing apparatus were followed, while the reasoning on ramming mass was distinguished because it involved a different product and factual setting. The later inclusion of refractories under the capital goods category did not change the position for the period in dispute under the input rule. Modvat credit was therefore not admissible.

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Issues: Whether refractory bricks used for lining an electric arc furnace are inputs used in or in relation to the manufacture of iron and steel products and are therefore eligible for Modvat credit.

Analysis: Refractory bricks were held to be constructional materials for the furnace and not materials consumed as inputs in the manufacture of iron and steel products. The earlier decisions treating refractories as part of the manufacturing apparatus were followed, while the reasoning relating to ramming mass was distinguished on the basis that it concerned a different product class and a different factual context. The later insertion of refractories in the capital goods category did not alter the position for the period in dispute under the input rule.

Conclusion: Refractory bricks are not inputs used in or in relation to the manufacture of iron and steel products, and Modvat credit is not admissible.

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