Modvat credit for tyre-manufacturing inputs accepted for air bags, bladders and shaper tubes used in production.

Air bags, bladders and shaper tubes were treated as eligible inputs for tyre manufacture because they were used in or in relation to the manufacturing process. The Tribunal relied on earlier decisions holding the same items to be inputs for tyres and noted that the issue was no longer res integra. On that basis, the assessee's claim for Modvat credit was accepted, while the separate claim under Notification No. 50/67 was not pressed.

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Issues: Whether air bags, bladders and shaper tubes were eligible inputs used in or in relation to the manufacture of tyres so as to qualify for Modvat credit under the relevant exemption notification.

Analysis: The only surviving dispute concerned the admissibility of input credit, as the claim under Notification No. 50/67 was not pressed. The Tribunal noted that the very same items had already been held in earlier decisions to be inputs for manufacture of tyres and that the issue was no longer res integra. Following those decisions, the Tribunal accepted the assessee's contention that the items were used in or in relation to manufacture and were therefore eligible for credit.

Conclusion: The items in question were held to be eligible inputs and the assessee was entitled to Modvat credit.

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