Modvat input eligibility excludes maintenance lubricants used only for machinery operation, not integral manufacture.

Lubricant oils and greases used only for machinery maintenance do not qualify as Modvat inputs under Rule 57A in the manufacture of sugar and molasses. The test is whether the goods are essential to manufacture and integral to the creation of the final product; items that merely facilitate smoother or optimum operation of machinery fall outside the permissible input category. On that reasoning, oils and greases used for maintenance are not admissible for Modvat credit.

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Issues: Whether lubricant oils and greases used for the maintenance of machinery qualify as inputs for Modvat credit under Rule 57A in the manufacture of sugar and molasses.

Analysis: Rule 57A does not define inputs exhaustively, but its deeming provisions and exclusions show that admissibility depends on whether the goods are essential to the manufacture of the final product. Goods merely facilitating smoother or optimum operation of machinery are not enough. The permissible category covers inputs directly or indirectly used in manufacture where they are integral to the creation of the final goods, but the line cannot be extended to items used only for better maintenance or operation of machinery.

Conclusion: Lubricant oils and greases used for machinery maintenance are not eligible inputs under Rule 57A, and Modvat credit is not admissible.

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