Modvat credit for synthetic filter cloth used in alumina manufacture was upheld as an essential input in the filtration process.

Synthetic filter cloth used in the Bayer process for manufacture of calcined alumina was treated as an essential input/raw material because it was consumed in the filtration stage necessary for production of the final product. Applying the settled principle that an item used in the manufacture of the final product qualifies as an input, Modvat credit was held admissible and could not be denied.

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Issues: Whether synthetic filter cloth used in the Bayer process for manufacture of calcined alumina is an input eligible for Modvat credit.

Analysis: The item was found to be an essential input/raw material in the manufacture of alumina, and the technical note showed that it was consumed in the filtration process necessary to produce the final product. The settled view applied was that an item going into the manufacture of the final product qualifies as an input for Modvat credit, supported by the cited Supreme Court principle on inputs used in manufacture.

Conclusion: Modvat credit on synthetic filter cloth could not be denied and the appeal was allowed.

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