Fireclay crucibles used as manufacturing containers qualify for Modvat credit, not apparatus or equipment exclusion.

Fireclay crucibles used in manufacturing Ultramarine Blue were treated as eligible Modvat inputs because their functional role was that of containers for ingredients during the process, not machines or self-contained apparatus. The fact that the crucibles could be used more than once did not by itself bring them within the exclusion for apparatus or equipment. The decisive test was their character and use in manufacture, and on that basis they fell outside the exclusion clause and qualified for credit.

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Issues: Whether fireclay crucibles used in the manufacture of Ultramarine Blue were eligible for Modvat credit as inputs, or were excluded as apparatus or equipment under the Modvat rules.

Analysis: The crucial consideration was the manner and character of use of the crucibles. They were used as containers for the ingredients during the manufacturing process and were not shown to be machines or self-contained equipment. The Tribunal noted that prior views had differed, but relied on the later view that crucibles, when functioning as containers or utensils, do not fall within the exclusion for apparatus or equipment. The finding that the crucibles could be used more than once did not by itself convert them into excluded equipment, because the decisive test was their functional character in the process of manufacture.

Conclusion: Fireclay crucibles were held to be eligible inputs for Modvat credit and not hit by the exclusion clause.

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