Modvat credit on foundry chemicals used for sand moulds was held admissible as inputs in manufacture of steel castings.

Foundry chemicals and resins used in sand mixtures for preparing sand moulds and sand cores were treated as eligible for Modvat credit because the moulds were incapable of being marketed and were not marketable or excisable goods. The Larger Bench further held that these inputs were used in relation to the manufacture of steel castings, so credit could be utilised towards duty on the castings. On that basis, the earlier contrary view was considered incorrect and Modvat credit on the foundry chemicals was held admissible.

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Issues: Whether foundry chemicals used in preparing sand moulds and sand cores were eligible for Modvat credit and whether such credit could be utilised towards payment of duty on castings.

Analysis: The Larger Bench view held that sand moulds were incapable of being marketed and were not marketable or excisable goods. It further held that chemicals or resins used in the sand mixture for producing sand moulds were used in relation to the manufacture of steel castings. In light of that binding view, the earlier contrary decision was held to be incorrect.

Conclusion: Modvat credit on the foundry chemicals was held admissible, and the appeal was allowed.

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