Input credit on heating medium allowed where the material was integral to manufacture and made the product marketable.

Hytherm 500 used as a heating medium in the lamination process was treated as integral to manufacture and necessary to make the product marketable, so it qualified as an input for credit purposes. Denial of credit on the ground that it was used only after manufacture was held unsustainable, and the input credit was admissible.

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Issues: Whether Hytherm 500 was eligible as an input for the manufacture of the final product and, therefore, whether denial of credit was justified on the ground that it was used only for heating the finished goods after manufacture.

Analysis: Hytherm 500 was found to be used as a heating medium in the lamination process and for making the product marketable. The use was treated as integral to the manufacturing activity rather than as a post-manufacture application. The conclusion was supported by earlier Tribunal decisions recognising similar material as an input.

Conclusion: The input credit on Hytherm 500 was admissible and the disallowance was unsustainable.

Ratio Decidendi: A material used as a heating medium in the manufacturing process, where such use is necessary to render the product marketable, qualifies as an input for purposes of credit.

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