Modvat credit on coated abrasive paper was upheld as an eligible input for plywood manufacture.

Modvat credit under Rule 57A was considered available on coated abrasive paper used for polishing plywood. The Tribunal treated the material as an input used in relation to manufacture, and noted that it was not known in the market as a tool. Relying on earlier decisions that had allowed credit on similar materials, it found no basis to deny eligibility. Modvat credit was therefore held admissible on coated abrasive paper, and the Revenue's challenge failed.

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Issues: Whether Modvat credit under Rule 57A of the Central Excise Rules was available on coated abrasive paper used for polishing plywood.

Analysis: The Tribunal noted that coated abrasive paper had been consistently treated in recent decisions as an input eligible for Modvat credit. It was also relied upon that such paper is not known in the market as a tool and is used in relation to the manufacture of the final product. Following the earlier ratio that had allowed credit on similar materials, the Tribunal found no reason to deny credit on coated abrasive paper.

Conclusion: Modvat credit was held admissible on coated abrasive paper under Rule 57A, and the Revenue's appeal was rejected.

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