Modvat input eligibility for hot tops upheld where chemical products were used in manufacture and not treated as excluded equipment.

Hot tops used in steel ingot manufacture were treated as eligible Modvat inputs under Rule 57A because they were chemical products placed on the mould and burnt up in the process, rather than machines, machinery, plant, equipment, apparatus, tools or appliances. The Tribunal held that the exclusion must be read by reference to the genus of such items, and that materials which function in the manufacturing process without answering that description are not excluded. Modvat credit was therefore admissible, and the assessee succeeded on eligibility.

---

---

Issues: Whether hot tops, being a chemical product used in the manufacture of steel ingots, were inputs eligible for Modvat credit under Rule 57A of the Central Excise Rules, 1944, or were excluded as machinery, apparatus or equipment.

Analysis: The facts before the Tribunal showed that hot tops were placed on the mould before pouring molten metal and were used as a catalyst to maintain temperature during manufacture. The exclusion in Rule 57A covered machines, machinery, plant, equipment, apparatus, tools and appliances. Applying the reasoning that such excluded expressions must be construed with reference to their genus, and noting that chemical products burnt up in the manufacturing process do not answer the description of apparatus or equipment, the Tribunal distinguished the earlier view relied on by the department and held the variation in facts to be material.

Conclusion: Hot tops were eligible inputs used in relation to the manufacture of steel ingots and were not hit by the exclusion in Rule 57A. Modvat credit was therefore admissible in favour of the assessee.

---