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of <h1>Modvat Credit Allowed for Oxygen Gas, Denied for Calcium Carbide</h1> The Tribunal held that Modvat credit on Oxygen gas was admissible as it qualifies as an input in the manufacture of tractor parts, not a tool. However, ... Appeal - Restoration of - Modvat Issues: Modvat credit admissibility on Oxygen gas and Calcium Carbide in the manufacture of tractor parts.The judgment revolves around the admissibility of Modvat credit on Oxygen gas and Calcium Carbide used in the manufacture of tractor parts. The appellant argued that Modvat credit should not be allowed on Oxygen gas and Calcium Carbide as they do not qualify as inputs in the manufacturing process of tractor parts. The department contended that Oxygen gas is a tool and therefore excluded from Modvat credit eligibility. The respondents claimed that both Oxygen gas and Calcium Carbide are essential inputs in the manufacturing process of tractor parts and should be eligible for Modvat credit under Rule 57A.The learned JDR for the appellant argued that Oxygen gas is used as a tool for cutting and, therefore, does not qualify as an input eligible for Modvat credit. Regarding Calcium Carbide, it was contended that it is not directly used in the manufacture of tractor parts. On the other hand, the learned Counsel for the respondents asserted that Oxygen gas is indeed used in or in relation to the manufacture of tractor parts and is not classifiable as a tool. Additionally, she argued that Calcium Carbide, being used in the production of Acetylene gas, which is further used in the manufacturing process of tractor parts, should be considered an input eligible for Modvat credit.The Tribunal analyzed the arguments presented by both sides and concluded that Oxygen gas, despite being used for cutting purposes, qualifies as an input in the manufacture of tractor parts and is not a tool. Therefore, Modvat credit on Oxygen gas was deemed admissible. However, with respect to Calcium Carbide, the Tribunal found that it is not directly used in the manufacturing process of tractor parts. As Rule 57A allows Modvat credit only on inputs directly used in or in relation to the final product, the Tribunal ruled that Modvat credit on Calcium Carbide is not admissible. Consequently, the impugned order was modified to reflect these findings, and the appeal was disposed of accordingly.
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