TMI Blog2006 (10) TMI 48X X X X Extracts X X X X X X X X Extracts X X X X ..... ng oils to be put into them to make them fit for operations. The appellant received lubricating oils for this purpose and took input credit equipment to the excise 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 as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or sold by them to their buyers. The Appellants, therefore, are not entitled to Modvat credit on lubricating oil supplied by 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... E/5484/04, filed by the Revenue are directed against granting of Modvat credit under the above-mentioned orders. 3.All the 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ime of delivery. Hence drums of small size are sent in unopened condition with the machines to serve as top up oil for the machines 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... falls in the category of parts. The language of Modvat Rule itself is "used in or in relation to the manufacture". Thus, the relationship need not be one of being a part. The rule also stipulates that an input will be eligible for credit be it a part or accessory, if its value remains included in the assessable value of the final product under assessment. That requirement also is satisfied in the present case. That the lubricant is supplied separately is not determinative of whether the lubricants are input or not. That is merely a matter of convenience. The write up of the appellant clearly brings out the reasons for supplying the lubricants separately. Those reasons are valid. 10.In view of what is stated above, I am of the view that t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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