Eligibility of Items of inputs which are not raw materials or components for purposes of credit under Modvat Scheme - Representation regarding - Central Excise - 4/89-CX.8

Eligibility of Items of inputs which are not raw materials or components for purposes of credit under Modvat Scheme - Representation regarding Circular No. 4/89-CX.8 Dated 21-3-1989 [From F. No. 267/103/87-CX.8] Government of India Ministry of Finance (Department of Revenue) Central Board of Excise Customs, New Delhi Subject : Eligibility of Items of inputs which are not raw materials or components for purposes of credit under Modvat Scheme - Representation regarding. It has been represented by M/s. Tata Yodogawa Limited that the benefit of Modvat credit should be given on products namely Tungsten Carbide Tips Inserts; Grinding Wheels; Thermo Couple Tips; Ingot Moulds; Bottom Plates; Mould boxes; Moulding Pattern and Moulds; Burnt lime; Coke dust; Fluorspar; Lancing pipes; D.B. Dolomite; Prepared Binders Resins for foundary moulds Cores; and Refractory bricks etc., used in the manufacture of iron and steel products. The matter has been examined by the Board. The decision of the Board in each case is as under :- 1. Tungsten Carbide Tips and Inserts. From their usage it is observed, that these items are basically used for removal of metal from semi-finished castings to produce the finished goods as per the customers drawings and specifications. It is basically a tool used for cutting purposes and hence not entitled to Modvat credit. 2. Grinding wheels. This is used for grinding the surface of castings for giving proper surface as per drawings and specifications. It is therefore more of a tool for processing the castings, and thus would not be entitled to Modvat credit. 3. Thermocouple tips. From its usage, it is seen that this item is used in immersion pyrometer for measuring the temperature of molten metal. Modvat credit would be admissible on this item, if like pyrometer tips, it too becomes part of the finished products. 4. Ingot mould and Bottom Plates. These are used in the process of making steel ingots from molten metals. There are in the nature of an apparatus for giving proper shape to the cast iron steel products. These can not be regarded as inputs for purpose of permitting modvat credit. 5. Burnt Lime From its uses it is observed that these goods are directly used along with other inputs for removing impurities etc. and thus act as input in the process of manufacture. Therefore the product can be regarded as input for manufacture of iron steel products and eligible for Modvat credit. 6. Coke Dust. From its usage, it is observed that coke dust is a flux material charged into the furnace alongwith raw material for removing impurities/making adjustments of compositions in steel items. This material is an essential input for manufacture of goods. Therefore it would be eligible for modvat purposes. 7. Fluorspar. This item too is charged into the furnace alongwith other raw materials for removal of impurities/adjustments of compositions. Therefore, it is an input used in relation to the manufacture of finished product and hence eligible for Modvat credit. 8. Lancing pipe. From its usage, it is observed that this product is being used as a pipe used for passing oxygen into the molten metal in the furnace for purposes of purifying the metal, is a part of machinery and hence is not an input entitled to Modvat Credit. 9. D.B. Dolomite This item is used for fettling the refractory linings in the hot furnace after each heat. Its basic purpose is for upkeepment/maintenance of the furnace and therefore cannot be regarded as an input for manufacture of iron steel products and hence not eligible to Modvat Credit. 10. Prepared binders and resins for Foundary moulds and cores. These inputs are used either in the furnace as a layer for its upkeep and protection against heat or for making moulds. Modvat credit is not admissible on the same if used in maintenance of furnace or exempted moulds. However if duty is paid on moulds, modvat credit on inputs used in the manufacture of such moulds will be admissible. 11. Refractory bricks. As already clarified vide Board's F. No. 267/53/88-CX.8, dated 12-4-1988 refractory bricks can not be regarded as inputs for manufacture of iron steel products and hence no modvat credit is admissible. The above instructions may be suitably informed. Receipt of this letter may be acknowledged.