Modvat credit requires substantive use in manufacture; a conveyor-like belt with incidental non-stick function did not qualify.

A teflon-coated glass fabric belt used in the manufacturing process was held not to qualify for Modvat credit under Rule 57A because its primary function was to convey material through production. The non-sticky, smooth coating assisted release of the product, but that feature was incidental and did not make the belt an input participating in manufacture. The item was treated as more akin to plant or transport equipment than to inputs such as felts or wire mesh that substantively form part of the manufacturing process. Credit was therefore not admissible.

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Issues: Whether teflon coated glass fabric belt used in the manufacture process of the final product was an eligible input for Modvat credit under Rule 57A.

Analysis: The belt was found to function primarily as a conveyor for carrying materials through the manufacturing process. Although the teflon coating gave a non-sticky, smooth surface and assisted release of the product, that feature was only incidental to its carriage function and did not make the belt comparable to felts, wire mesh, or other items held to participate in manufacture. The item was treated as more akin to plant or machinery used for transport of material, and not as an input that participated in the manufacture of the notified final product in the manner required for Modvat credit.

Conclusion: The belt was not an eligible input under Rule 57A and Modvat credit was not admissible.

Final Conclusion: The appeals fail because the disputed item did not satisfy the test of an input used in relation to manufacture.

Ratio Decidendi: For Modvat credit, the item must participate in the manufacturing process or be used in relation to manufacture in a substantive manner; a conveyor-like item whose primary role is carriage of material does not qualify merely because it has an incidental release or non-stick function.

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