TMI Blog2000 (5) TMI 64X X X X Extracts X X X X X X X X Extracts X X X X ..... all the appeals, the dispute relates to a period prior to 1-3-1997. 2.In the case of Pragati Paper Mills (P) Ltd. v. Collector of Central Excise, Meerut [1996 (66) ECR 42 (Tribunal) = 1996 (15) RLT 177 = 1996 (88) E.L.T. 137], a Single-Member Bench of the Tribunal held lubricating oils and greases to be eligible inputs for the Modvat credit under Rule 57A. Again, a Two-Member Bench of the Tribunal held to the same effect in the case of Sipta Coated Steel Ltd. v. Commr. of C.Ex., Aurangabad [1998 (99) E.L.T. 553 (Tribunal)]. The same view was taken by a Single-Member Bench of the Tribunal, while dealing with a reference application filed by the Revenue, in the case of Commissioner of Central Excise, Cal.II v. Black Diamond Beverages Ltd. [1999 (32) RLT 375 (CEGAT)] relying on the decisions of the Tribunal in Pragati Paper Mills (P) Ltd. (supra) and Sipta Coated Steel Ltd. (supra). However, a learned Single Member of the Tribunal took a diametrically opposite view on the issue in the case of Kanoria Sugar General Mfg Co.Ltd. v. Collector of Central Excise, Allahabad [1996 (67) ECR 635 (Tribunal) = 1996 (87) E.L.T. 522]. Reference of the issue to this Bench has been occasioned by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (b) paints and packaging materials, (c) inputs used as fuel, (d) inputs used for generation of electricity, used within the factory of production for manufacture of final products or for any other purpose, and (e) accessories of the final product cleared alongwith such final product, the value of which is included in the assessable value of the final product, ] but does not include - (i) [machines, machinery, plant, equipment, apparatus, tools, appliances or capital goods as defined in rule 57Q] used for producing or processing of any goods or for bringing about any change in any substance in or in relation to the manufacture of the final products; (ii) packaging materials in respect of which any exemption to the extent of the duty of excise payable on the value of the packaging materials is being availed of for packaging any final products; (iii) packaging materials or containers, the cost of which is not included in the assessable value of the final products under section 4 of the Act;] [and] [(iv) crates and glass bottles used for aerated waters.]" 4.According to the definition of 'input' inbuilt in the above provisions, 'inputs' are goods used in or in r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hinery and cannot be considered to be 'essential' for the process of manufacture and therefore; would not qualify to be 'inputs' within the meaning of this expression under Rule 57A. He has relied on the decision of the Single Member Bench in Kanoria Sugar General Mfg. Co. Ltd. (supra). 7.We have carefully examined the rival submissions and have noted the case law cited before us. 8.In Pragati Paper Mills (P) Ltd. (supra), the Single Member Bench applied the test of commercial expediency as laid down by the Supreme Court in the case of J.K. Cotton Spg . Wvg.Mills Co. Ltd. v. STO [AIR 1965 SC 1310] and held that the use of lubricating oil was in relation to the manufacture, though not directly as raw material in the manufacturing process. Without such use of lubricating oil in the machinery used for manufacture of paper, such manufacture would become commercially inexpedient. In Sipta Coated Steel Ltd. (supra), the Two-Member Bench took note of the generation of heat from the friction in movement of the working surfaces of tractor machine, in the absence of lubrication, and found that lubricating oil was essential to obviate the friction and ensure smooth functioning of the m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ypack Systems (Pvt.) Ltd. [1988 (36) E.L.T. 201 (SC)], wherein the expression 'in relation to' occurring in Section 4(1) of the Swadeshi Cotton Mills Company Limited (Acquisition and Transfer of Undertakings) Act, 1986 had been held to be equivalent to or synonymous with the expressions 'concerned with' and 'pertaining to'. The Bench then proceeded to examine the purpose of incorporating the words 'in relation to the manufacture' in Rule 57A and observed as follows :- "The purpose is certainly to widen further the scope, ambit and content of "inputs". The purpose is to widen the ambit so as to attract also goods which do not enter directly or indirectly into the finished product, but are used in any activity concerned with or pertaining to the manufacture of finished goods." 11.The Bench, in Union Carbide India Ltd. (supra), also followed the decision of the Calcutta High Court in Singh Alloys Steels Ltd. v. Assistant Collector of Central Excise [1993 (66) E.L.T. 594]. The High Court, in the said case, had held that goods which were not raw materials converted into finished products and which were charged into furnace as fettling materials to dissolve and seal the crevices in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the ratio of the decision of this Tribunal in Union Carbide India Ltd. (supra). Accordingly, we hold that the lubricants in question were used in or in relation to the manufacture of paper products and the same qualified to be "inputs" for the purpose of Modvat credit under Rule 57A during the relevant period. 16.In the light of our decision, the views taken in the cases of Pragati Paper Mills (supra), Black Diamond Beverages Ltd. (supra) and Sipta Coated Steel Ltd. (supra) have to be accepted as correct in law. 17.We shall now advert to the contra decision of the Tribunal in the case of Kanoria Sugar General Mfg.Co. Ltd. (supra) which was strongly relied on by Ld. JDR. In that case, the Single Member Bench formulated the issue to this effect: whether the lubricating oils and greases used for maintenance of the machinery used for manufacture of sugar and molasses qualified to be inputs for the purpose of Modvat credit under Rule 57A. The Bench observed that Rule 57A did not define 'input' and sought to draw a line between inputs which were essential for the manufacture of the final products and those which were not so essential. According to the Bench, inputs which are essent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... author on the point. It was said : "....A common form of argument used by counsel in legal cases is to suggest that if the court decides in favour of the opposing counsel's arguments, it will become necessary to draw lines which may be very difficult or impossible to draw. "Where will you draw the line" is, of course, a question which must be faced by a legislator who is actually proposing to lay down lines for all future cases, Out it is not a question which needs in general to be faced by common law courts who proceed in slow stages, moving from case to case...." [See : "Pragmatism and Theory in English Law; page 75; Hamlyn Lectures of 1987] The learned Author recalls Lord Lindley's "robust answer" to the question Where will you draw the line? "Nothing is more common in life than to be unable to draw the line between two things. Who can draw the line between plants and animals? And yet who has any difficulty in saying that an oak-tree is a plant and not an animal?" [See Att.-Gen.v. Brighton Hove Co-operative Assoc. (1900) 1 Ch. 276 at p. 282] Again, Lord Coleridge in Nayor of Southport v. Morris (1983) 1QB.359 at 361 said : "The Attorney-General has asked where we ..... X X X X Extracts X X X X X X X X Extracts X X X X
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