Modvat input eligibility for wire mesh and felts raised an identical question of law fit for High Court reference.

Eligibility of Wire Mesh and Felts as Modvat inputs under the exclusion clause in the Explanation to Rule 57A of the Central Excise Rules, 1944 was treated as raising an identical question of law already referred in another matter. The goods were used as parts of machinery in paper manufacture, and the Tribunal found that the same legal issue on the scope of the exclusion clause had earlier been recognised for reference. On that basis, the matter was considered fit for reference under section 35G to the High Court, and the Revenue's reference application was allowed.

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Issues: Whether a question of law arose for reference under section 35G where the dispute concerned eligibility of Wire Mesh and Felts as inputs for Modvat credit and the same legal issue had already been referred in another matter.

Analysis: The disputed goods were used as parts of machinery in the manufacture of paper and paper products. The Tribunal noted that an identical question regarding the scope of the exclusion clause in the Explanation to Rule 57A of the Central Excise Rules, 1944 had already been recognised and referred in another case involving similar inputs. On that basis, the Tribunal held that the present matter also gave rise to an identical question of law fit for reference to the High Court.

Conclusion: A question of law existed and the Revenue's reference application was allowed, with the matter directed to be referred to the High Court.

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