Modvat credit for machinery parts used in manufacture upheld where precedent accepted their role in the production process.

Modvat credit was recognised as admissible on disputed items used in the manufacturing process, including goods described as parts of machinery, because binding precedent had already accepted credit where such goods were used in relation to manufacture of finished products. The Tribunal followed the earlier Larger Bench and related decisions, and rejected the objection that the items lost eligibility merely because they were not conventional inputs. The operative principle is that use in the manufacturing process can sustain Modvat eligibility even where the goods are characterised as machinery parts.

---

---

Issues: Whether Modvat credit was admissible on the disputed items used in the manufacturing process, including items said to be parts of machinery.

Analysis: The disputed items had already been considered in earlier decisions, including a Larger Bench ruling, which recognised credit where the goods were used in the process of manufacture of finished products. The Tribunal followed those precedents and did not accept the objection that the items were disqualified merely because they were used as machinery parts rather than as conventional inputs.

Conclusion: Modvat credit was held admissible on the disputed items, and the appeal succeeded.

Ratio Decidendi: Goods used in the manufacturing process are eligible for Modvat credit even if they are characterised as parts of machinery, where binding precedent has recognised their use in relation to manufacture.

---