- (1.) Heard Sri R.C. Shukla, Advocate, for the applicant and Sri V.K. Upadhyay, Learned Senior Counsel, assisted by Sri Ritvik Upadhyay, Advocate for respondent-assessee. Following question has been referred to be answered by this Court: "Whether items namely Synthetic Filter Cloth and Asbestos Mill Board said to be not directly used in the manufacture of Aluminium and Products thereof or are used as part of plant and machinery for production of Aluminium and Products thereof, can be considered as "inputs" eligible for Modvat credits under Rule 57A of the Central Excise Rules, 1944 (hereinafter referred to as "Rules, 1944")?"
(2.) The period of dispute is July, 1989 to January, 1991. The assessee M/s. Hindalco Industries Limited is engaged in manufacture of aluminium and other connected products. Its final products are liable to Central Excise duty under Chapter 76 of Schedule to Central Excise Tariff Act, 1985 (hereinafter referred to as "CET Act, 1985"). The assessee claimed Modvat credit in respect to Synthetic Filter Cloth and Asbestos Mill Board treating the same to constitute inputs, in or in relation to manufacture of their final products. A declaration under Rule 57G vide letter dated 6-2-1990 for availing credit of Excise duty paid on various inputs was made by assessee and the said inputs included Synthetic Filter Cloth, the nature/function whereof was described by the assessee as fabrication of process liquor. With regard to Asbestos Mill Board its nature/function was described as Furnace/Pot insulation.
(3.) The Revenue took the view that these items are part of plant and machinery equipments, not liable to be treated as "inputs" in terms of Rule 57A of Rules, 1944, hence the assessee suppressed function of aforesaid items and availed irregular Modvat credit for the period of July, 1989 to January, 1991, the amount whereof comes to Rs. 1,02,582.97.;