Modvat credit for filter aid upheld where dicamol was used in relation to manufacture and facilitated production.

Rule 57A was interpreted broadly to cover goods used in or in relation to manufacture, not only materials that physically enter the finished product. Dicamol, used as a filter aid in antibiotic production, was treated as an input because it facilitated the manufacturing process and was connected with activities pertaining to manufacture. On that basis, the material qualified for Modvat credit. The analysis relied on the wide ambit of the phrase "used in or in relation to the manufacture" and the supporting Larger Bench view on similar production materials.

---

---

Issues: Whether dicamol used as a filter aid in the manufacture of antibiotics was an input within the meaning of Rule 57A of the Central Excise Rules and thus eligible for Modvat credit.

Analysis: The expression "used in or in relation to the manufacture" in Rule 57A has a wide ambit and is intended to extend the scope of inputs beyond goods which physically enter the finished product. Goods used in activities concerned with or pertaining to manufacture also fall within the expression. A filter aid used in the production process, though not itself forming part of the final product, is covered where it facilitates the manufacturing process. The earlier Larger Bench view on similar materials used in production supports this interpretation.

Conclusion: Dicamol filter aid was an input within Rule 57A and the assessee was entitled to Modvat credit.

---