TMI Blog1991 (3) TMI 285X X X X Extracts X X X X X X X X Extracts X X X X ..... arises for our consideration in the present appeal is whether the thinners used by the respondent for diluting the paint which ultimately are used in the manufacture of vacuum cleaners would be entitled to Modvat credit under the Modvat Rules. Shri P. Sundararaju, Ld. SDR urged that paint is a manufactured commodity and thinners come into existence thereafter and is merely used to dilute the paint for spraying on an article, such as vacuum cleaners and cannot be construed to be an input in relation to the manufacture of paint of vacuum cleaners. 3. We have considered the submissions of the Ld. SDR and gone through the records. The Finance Ministry by their communication dated 23rd September, 1987 has clarified a similar issue as under :- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... resent case thinner is only used to dilute the paint for use in spray- painting in vacuum cleaners. Therefore, we hold that in the facts and circumstances of the case thinners used in spray painting vacuum cleaners would be considered to be an input in or in relation to the manufacture of vacuum cleaners for eligibility to Modvat credit. In this view of the matter the appeal is dismissed. 4. [Assent per : V.P. Gulati, Member (T)]. - I agree with the above view of Learned Member (J). It is seen that after the communication of the Ministry in 1987 the Ministry has further examined the matter and issued subsequent instructions vide F. No. B. 22/32/87-TRU, dated 5-4-1988 and in these instructions the Ministry has opined as under:-. The mat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the thinners would not be eligible for the benefit of Modvat credit. Independent of what has been set out in the Ministry s instructions we observe that it is clear that thinners in question are clearly used as an additive by way of diluents rendering the paint fit for use in spray painting of vacuum cleaners. It is not the case of Revenue that vacuum cleaners are sold without being spray painted or that these are ready for marketing without spray painting. Spray painting appears to be essential before the product can be put in the market stream. There is no dispute that the paints by themselves are an eligible item for Modvat credit and thinners falling under Item 38.14 are also one of the eligible inputs. The thinners, when added to ..... X X X X Extracts X X X X X X X X Extracts X X X X
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