Modvat credit for testing materials was denied because they were not inputs used in or in relation to manufacture.

Modvat credit was denied on laminated plastic film and paper poly used only for testing packing machines, because such materials were not inputs used in or in relation to manufacture of the final product under Rule 57A of the Central Excise Rules, 1944. The Tribunal treated the matter as covered by its earlier decision in the assessee's own case on similar testing materials and upheld the denial of credit, with the connected appeals failing.

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Issues: Whether Modvat credit was admissible on laminated plastic film and paper poly used for testing packing machines under Rule 57A of the Central Excise Rules, 1944.

Analysis: The items in question were denied credit on the ground that they were used only for testing the packing machine and not in or in relation to the manufacture of the final product. The dispute was treated as covered by the Tribunal's earlier decision in the assessee's own case, where credit on similar testing materials had been disallowed after considering the relevant legal position.

Conclusion: Modvat credit was not admissible on the materials used for testing the packing machines, and the issue was decided against the assessee.

Final Conclusion: The denial of credit was upheld and the connected appeals failed.

Ratio Decidendi: Materials used only for testing a manufactured machine, and not as inputs used in or in relation to manufacture, do not qualify for Modvat credit under Rule 57A of the Central Excise Rules, 1944.

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