Modvat credit on lubricating oil and flex oil treated as admissible inputs in manufacture.

Modvat credit was held admissible on lubricating oil used in manufacturing machines, as it was treated as an input under the Larger Bench view. Flex oil was also accepted as an eligible input because it was used at the mixing stage of chemicals with rubber to produce compounding rubber, which was itself used in manufacture, and that factual position was not disputed by the Revenue. Both items were treated as essential inputs for the final product, so the appeal failed.

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Issues: Whether Modvat credit was admissible on lubricating oil and flex oil as inputs used in the manufacture of the final product.

Analysis: Lubricating oil used in machines for manufacture of the final product was treated as entitled to Modvat credit on the basis of the Larger Bench view that such oil qualifies as an input. Flex oil was found to be used at the mixing stage of chemicals with rubber for manufacture of compounding rubber, which was itself used in the manufacture of the final product, and this factual position was not controverted by the Revenue. On that basis, both items were treated as essential inputs for manufacture.

Conclusion: Modvat credit on lubricating oil and flex oil was admissible, and the appeal failed.

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