Modvat credit on aluminium sheets depends on common parlance test, not tariff classification, where sheets remain inputs in manufacture.

For Modvat credit under Rule 57A, eligibility turned on whether the item fell within an excluded category in common parlance or trade usage. Aluminium sheets cut to shape and used in plywood manufacture were treated as inputs, and repeated use did not alter their essential character as sheets. Classification under tariff chapters was not decisive. The item was not shown to be known as an appliance, so it did not fall within the exclusion and Modvat credit was admissible.

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Issues: Whether aluminium sheets cut to specific shape and used in the manufacture of plywood were entitled to Modvat credit as inputs under Rule 57A of the Central Excise Rules, 1944, or were excluded as an appliance.

Analysis: The relevant test under Rule 57A was whether the goods fell within the excluded category of inputs as understood in common parlance or in trade usage. The aluminium sheets were accepted as inputs in the manufacturing process, and there was no evidence that they were known as an appliance. Mere repeated use did not change their essential character as sheets, and classification under tariff chapters was not decisive for Modvat eligibility.

Conclusion: The aluminium sheets did not fall within the excluded category of appliances and were eligible for Modvat credit.

Final Conclusion: The appeal was allowed and the assessee obtained Modvat credit on the aluminium sheets used in plywood manufacture.

Ratio Decidendi: For purposes of Modvat credit under Rule 57A, eligibility depends on the ordinary or trade meaning of the alleged excluded item, and a material used as an input does not cease to be one merely because it is repeatedly used or cut to shape unless it is shown to be an excluded category in common parlance.

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