Modvat credit on special lubricating oil used in glass moulding was allowed as an input integral to manufacture.

Modvat credit was held admissible on Kleenmold 170 because the special lubricating oil was used directly in glass moulding as part of the manufacturing process. It functioned as an interface between the mould and the glass article, allowing detachment without scratching, cracking or breakage, and was therefore integral to manufacture rather than a mere machine lubricant. The earlier ruling on ordinary lubricant oil was distinguished on its facts. On this basis, the input satisfied the statutory nexus with manufacture and the Department's appeal failed.

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Issues: Whether Modvat credit was admissible on Kleenmold 170, a special lubricating oil used in glass moulding, as an input used in or in relation to manufacture.

Analysis: The material was used directly in the glass manufacturing process to create an interface between the mould and the glass article, enabling easy detachment without scratching, cracking, or breakage. Its use was not as a lubricant for machinery, but as a special substance integral to the manufacturing operation itself. The earlier ruling relied upon below concerned ordinary lubricant oil used in machines and was distinguishable on facts. On the nature of the item and its role in the process, the credit claim satisfied the statutory requirement of an input having nexus with manufacture.

Conclusion: Modvat credit on Kleenmold 170 was admissible and the Department's appeal failed.

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