Modvat credit on gases used in scrap cutting raised a pure question of law requiring High Court consideration.

Conflicting Tribunal rulings on whether Modvat credit was admissible for oxygen and acetylene gas used to cut scrap into smaller pieces for manufacture of steel ingots raised a pure question of law under Rule 57A of the Central Excise Rules, 1944. The Tribunal noted disagreement on whether the gases were used in or in relation to manufacture and whether credit could be claimed on that basis. Because the point had produced divergent views, authoritative consideration by the High Court was required, and the reference application was allowed and sent for the High Court's views.

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Issues: Whether, in view of conflicting Tribunal decisions on the admissibility of Modvat credit on oxygen/acetylene gas used for cutting scrap into smaller pieces for manufacture of steel ingots, the reference application deserved to be allowed.

Analysis: The matter raised a pure question of law on the availability of Modvat credit under Rule 57A of the Central Excise Rules, 1944. The Tribunal noted that earlier decisions had taken divergent views on whether such gases were used in or in relation to manufacture and whether credit was admissible. Since two conflicting views existed on the same point, the issue required authoritative consideration by the High Court.

Conclusion: The reference application was allowed and the matter was sent to the High Court for its considered views.

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