1994 (10) TMI 136 - AT - Central Excise

Summary

Issues:
Whether foundry fluxes and other chemicals used for the manufacture of valves and corks are eligible for Modvat credit.

Analysis:
The Collector of Central Excise, Chandigarh sought a reference on the eligibility of foundry fluxes and chemicals used in the manufacture of valves and corks for Modvat credit. The Tribunal, in a previous order, ruled that foundry fluxes used in valves molds, which are consumed during the production of finished products, are indeed eligible inputs for Modvat credit.

The Revenue argued that foundry fluxes and chemicals are used in the production of molds, which are tools that hold molten metal and break when cooled down to release the cast bodies and parts. They contended that these tools are not eligible inputs for Modvat credit on finished products like molds and cores.

On behalf of the appellants, it was argued that the molds are only an intermediate stage in the manufacturing process of valves and corks and are not marketable as standalone goods. The foundry fluxes used in the production of sand molds and corks should qualify for Modvat credit, citing previous cases where eligibility for Modvat credit on similar inputs was upheld.

The Tribunal considered past judgments where it was established that items like sand cores and molds, which are destroyed during use and not sold in the market, can still qualify for Modvat credit as they are indirectly used in the production of final output. The Tribunal also highlighted that unstable and breakable items with no shelf life, like sand molds, are not marketable products and thus cannot be considered goods or equipment for Modvat credit purposes.

Based on the precedent set by previous judgments, the Tribunal concluded that the legal position regarding marketability and related factors had already been settled. Therefore, there was no new question of law requiring a reference to the High Court arising from the Tribunal's Order. Consequently, the Reference Application was dismissed.