Fork lift handling as part of manufacture can support Modvat credit, with no separate referable legal question arising.

Fork lifts used in a factory may qualify for Modvat credit as capital goods where their handling function is essential to manufacture of the final product under Rule 57Q read with Rule 57S. The Tribunal applied the settled principle that handling can form part of the manufacturing process if, without that activity, the final product cannot be manufactured. As the departmental reference raised no independent legal error beyond disagreement with that settled application, no separate referable question of law was found to arise and the reference failed on merits.

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Issues: Whether fork lifts used in the factory were eligible for Modvat credit as capital goods under Rule 57Q of the Central Excise Rules, 1944 read with Rule 57S of the Central Excise Rules, 1944, and whether any referable question of law arose from the Tribunal's order.

Analysis: The Tribunal noted that the controlling principle was whether the handling activity performed by the fork lifts was essential to the manufacture of the final product. It applied the principle that handling can form part of the manufacturing process where, without such function, the final product cannot be manufactured. On that basis, the earlier order was treated as covered by the Supreme Court's decision on the scope of manufacturing process and handling. Since the departmental reference did not disclose any independent legal error apart from challenging the application of that settled principle, no separate question of law was found to arise.

Conclusion: The reference was held not maintainable on merits and the department did not succeed.

Final Conclusion: The Tribunal declined to refer the matter to the High Court because the dispute was concluded by the settled Supreme Court principle on essential handling activity in manufacture.

Ratio Decidendi: Where handling through fork lifts is essential for manufacturing the final product, the activity may fall within the manufacturing process for Modvat purposes, and no referable question of law arises when the Tribunal's view is governed by binding precedent.

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