Modvat eligibility for lubricating oil raised a referable question of law, leading to reference to the High Court.

A referable question of law arose on whether lubricating oil used in machinery qualified for Modvat credit under Rule 57A of the Central Excise Rules, 1944. The Tribunal had relied on its earlier decisions to deny credit, but the controversy was treated as one involving the legal scope of Modvat eligibility rather than a pure finding of fact. The question was therefore answered in the affirmative, and the matter was referred to the High Court for opinion in favour of the assessee.

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Issues: Whether a question of law arose from the Tribunal's order so as to warrant reference to the High Court on the eligibility of lubricating oil for Modvat credit under Rule 57A of the Central Excise Rules, 1944.

Analysis: The Tribunal had followed its earlier decisions to deny Modvat credit on lubricating oil used in machinery. The reference application was opposed on the footing that no question of law arose. The order records that, in the light of the cited High Court decision and the nature of the controversy as to whether lubricating oil used in the factory fell within Rule 57A, a referable question of law did arise from the Tribunal's order.

Conclusion: The question was answered in the affirmative and referred to the High Court for opinion, in favour of the assessee.

Final Conclusion: The Tribunal accepted that the dispute gave rise to a referable question of law and directed reference of the Modvat eligibility issue to the High Court.

Ratio Decidendi: Where the controversy turns on the legal scope of Modvat eligibility under the relevant excise rule, and the order implicates a question of law rather than a pure finding of fact, reference to the High Court is warranted.

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