Modvat credit for consumables used in metallising process allowed as inputs related to manufacture

Graphite boats, graphite powder and solvent used in vacuum metallising were treated as inputs used in relation to manufacture, because they performed an integral consumable function in heating, vaporising and depositing aluminium on plastic film. Applying the wide meaning of "used in relation to manufacture," the materials qualified even though they were not incorporated into the final product and were physically consumed in the process. Modvat credit was therefore available under Rule 57A.

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Issues: Whether graphite boats, graphite powder and solvent used in the vacuum metallising process for manufacture of metallised plastic films were eligible for Modvat credit as inputs under Rule 57A.

Analysis: The goods were used in the manufacturing process to heat and vaporise aluminium, to carry the coating paste, and to enable uniform deposition of aluminium on the plastic film. Applying the settled interpretation that the expression "used in relation to manufacture" has a wide ambit, goods used in activities connected with manufacture qualify even if they do not themselves get incorporated into the final product. The materials functioned as consumable items in the evaporation zone of the metallising plant and were not independent appliances or apparatus. Their physical consumption and the fact that they did not enter the final product did not justify denial of credit.

Conclusion: Graphite boats, graphite powder and solvent were eligible for Modvat credit as inputs used in relation to the manufacture of the final product.

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