TaxTMI 
TaxTMI 
2006 (10) TMI 48
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....duty paid on the lubricants. At the time of removal of the machines, lubricating oils were supplied along with machines in separate 25 litre drums. No additional charge was made for the lubricating oils so supplied. The value of lubricants formed part of the price of the machinery and excise duty was paid on the full price of the machinery including the cost of lubricants supplied in 25 ltrs. drums. Dispute arose as to whether input credit was available in regard to the lubricating oil so supplied. In his order dated 28th March, 2003 the Commissioner (Appeals) held against the asseesee. His finding may be read :- "I have carefully considered the written and oral submission made by the appellants as well as the case records. The appeal is b....
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....y them to their buyers". Appeal No. E/4143/03 of the assessee is against the above order. 2.The dispute continued for later period also and under subsequent order dated 22-6-04, 7-7-04 and 9-8-04, Commissioner (Appeals) held in favour of the assessee. The reasoning of those orders may be also read :- "As far as the lubricant oil supplied along with the machines (20/25 litres drums), the Appellants have stated that these oil drums were supplied as an accessory along with the final products at the time of clearance from the factory to the buyers, so that the machines can be used immediately by the customers by using such oil which are specialized in nature and that the value of the oil is included in the value of the finished product and d....
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....e appeals were heard together as the issue involved is the same. The submission of the ld. Counsel for the appellant is that the later decision of the Commissioner constitutes the correct law. It is being pointed out that lubricants in question are essential for the functioning of the machines inasmuch as the supplied quantity of lubricants is to be poured into the machines before its use and, therefore, these oils are necessary inputs in the manufacture of the machinery. He would submit that since Modvat Rule allowed credit on any input "used in or in relation to the manufacture of a final product" all necessary inputs would be eligible for credit. He has relied on the Circular No. 344/60/97-CX dated 22nd October 97 clarifying that transfo....
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....nes at customer site. This procedure is aimed for smooth commissioning and operation of the machines at customer's site. Sd/- (S.K.BOHRA) Sr. DGM Head-Production-Assembly & Marketing Services 6.The ld. Counsel also relied on the decision of this Tribunal in the case of Madras Aluminium Co. Ltd. v. CCE, Coimbatore - 2001 (136) E.L.T. 182 wherein it was held that transformer oil used as coolant in transformer would be eligible for Modvat credit. 7.The ld. SDR would submit that Modvat credit is available only for goods, which are used in the manufacture of a final product in the factory. It is his contention that manufacturer of the machinery in question is complete in the factory before the dispatch of the machine....