Modvat credit for grinding media turns on factual use in manufacture, not an automatic question of law.

Grinding media used in cement manufacture was treated as a possible Modvat input where it was used in an activity connected with manufacture, because the expression "inputs in relation to manufacture" was read broadly and the exclusion in the Explanation to Rule 57A was held to cover machinery or units, not their parts. The Tribunal also held that the question whether a particular item qualifies as an input depends on the facts and evidence, and therefore does not automatically raise a referable question of law. On that basis, the reference application was rejected and the Revenue's challenge to Modvat credit failed.

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Issues: Whether grinding media used in the manufacture of cement was eligible as input for Modvat credit under Rule 57A of the Central Excise Rules, 1944, and whether the Department's reference application raised a referable question of law.

Analysis: The Tribunal had already taken the view that the expression "inputs in relation to manufacture" is of wide amplitude and covers goods used in activities connected with the manufacture of the finished product, even if they do not enter the final product directly or indirectly. It also noted that the exclusion clause in the Explanation to Rule 57A excludes machinery or units, not parts thereof, and that the item in question was used in relation to manufacture. The request for adjournment on the ground that an SLP had been filed against an earlier Tribunal decision was held to be no ground for postponing the reference. The Tribunal further held that whether a particular item qualifies as an input is a question turning on the facts and evidence, and does not necessarily give rise to a question of law for reference.

Conclusion: The reference application was rejected, and the Revenue's challenge to Modvat credit failed.

Final Conclusion: The order affirms that eligibility for Modvat credit in such cases depends on the factual use of the item in relation to manufacture, and that a mere factual dispute does not automatically become a referable question of law.

Ratio Decidendi: Where the item is used in an activity connected with manufacture and is not excluded by the governing explanation, its eligibility for Modvat credit is a factual determination rather than a question of law suitable for reference.

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