TaxTMI 
TaxTMI 
1996 (7) TMI 380
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....ted 9-12-1987 denying the Modvat credit on certain inputs used by the appellants on which they have claimed the credit as they are used in or in relation to manufacture of their final product paper. The description of the inputs in question, their function in the process of manufacture and the ground on which the lower authorities had not considered them as eligible inputs for Modvat credit, are given in the tabular columns below :- Sl.No. Description Uses and function Reasons given by Lower authorities 1. Sulphuric Acid For demineralisation and processing of water so as to make it fit for use for generating steam which is then used for generation of electricity for running the plant. There are also other uses about whi....
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....r to prevent the deposit of salts and for removing unwanted elements from raw water and thus for maintenance of boiler. 10. Hydrazine Hydrate For purification of water by reacting with oxygen and converting it into water inside the deareator system. The steam generated by using this water is then used for cooking of bamboo/ hardwood chips, drying of paper and generation of electricity for running the plant. These are used for treatment of water to prevent the deposit of salts and for removing unwanted elements from raw water and thus for maintenance of boiler. 11. Ion Exchange Resins For treatment of boiler water to make it fit for generating steam to be used for cooking of bamboo/hardwood chips drying of paper and gene....
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....in raw materials for manufacture of paper and paper board. Before being put in the digester, these are required to be cut into smaller pieces and this job is done in cutting machine. The cutting machine has got a disc and fly knives are fitted as per requirement onto the said disc. Dead Knives are fitted at the stationery portions of cutting machine as per requirements. These knives require frequent replacement. -do- 18. Cutter Knives These are parts of paper cutting machines. These are fitted into the said machines and require frequent replacement. These are parts of machinery. 19. Chipper Disc, Shell Liner, Adapter plug Filling and Full Bar Shell Filling. These are parts of different machines. -do- 2. Sh....
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....3-1987 in Civil Appeal No. 2101 (NM) of 1986. Therefore, so far as these chemicals at S. Nos. 1-11 are concerned, their use in paper making is a technological necessity as shown by the textual authorities and their status as an input in the manufacture of paper has also been recognised in the judicial decisions of the Tribunal as upheld by the Supreme Court. The ld. counsel further submitted that the inputs at S. Nos. 14, 15 and 16 are felts and synthetic fabrics, special link dryer fabric, dandy cover etc. specifically covered by the decision of the Larger Bench reported in 1996 (86) E.L.T. 613 (Tribunal) = 1996 (15) RLT 144. In the same Larger Bench decision, the principle has been laid down that the exclusion clause categorising material....
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....nce they would fall within the category of inputs used in relation to the manufacture of the final product. Some of the inputs like felts wire cloth dandy cover are specifically covered by the Larger Bench decision. Similarly the inputs which perform their functions only on being fitted on machines used in the manufacture of paper being parts thereof would also be so eligible for Modvat credit. However, in the case of two of the inputs at S. Nos. 12 and 13 of the table, we find that these are in the nature of organic surface active agents used for cleaning of felts and for removing short fibres and other impurities therefrom. From the function of these materials it is not possible to hold that they are used directly or indirectly as parts o....