Modvat credit for process lubricant used on steel strips was upheld because it formed part of manufacture, not machinery use.

RUSTILD DW was treated as an input directly used in the manufacture of steel strips because it lubricated the final product to prevent rusting, rather than lubricating machinery. On that factual basis, the input qualified for Modvat credit under Rule 57 of the Central Excise Rules, and the Revenue's contrary view was rejected.

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Issues: Whether the chemical input known as RUSTILD DW was entitled to Modvat credit under Rule 57 of the Central Excise Rules.

Analysis: The input was found to be used for lubrication of the final product, namely steel strips, to prevent rusting, and not for lubrication of the machinery. On that factual basis, the input was treated as directly used in the manufacture of the final product and the Revenue's contrary assumption was rejected.

Conclusion: The input was held eligible for Modvat credit and the Revenue's appeal failed.

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