DUNLOP INDIA LTD Vs. COLLECTOR OF C EX

JUDGEMENT

(1.) THIS appeal is against the order of Collector of Central Excise (Appeals), Madras, The short point that falls for decision in the appeal is whether Diaphragms and Air Bags used in the appellants' factory are eligible for the benefit of MODVAT credit under Rule 57A. The lower authorities have held that these two items connected to the mould are used for giving shape to the tyres and in view of this use the same can be considered as tools and appliances which are excluded from the MODVAT credit under Rule 57A of the Central Excise Rules.

(2.) The learned representative of the appellants submitted that diaphragms and air bags should be considered consumables used in relation to the manufacture of tyres. He pleaded that these items are capable of some repetitive use and after use of a couple of times, these items lose their utility and are discarded. He pleaded that these items can be considered as consumables. He contested that the two items did not stand excluded from the purview of Rule 57A as these could not be considered as tools and appliances which are specifically excluded. In this connection he cited the order of the Collector of Central Excise (Appeals), New Delhi in which another manufacturer had been given the benefit in terms of Notification 217/86 under which exemption to MODVAT items if used within the factory of production in the manufacture of finished product is permitted. He pleaded that the items excluded from the purview of the benefit as in the case of Rule 57A are as under :

(3.) WE observe that the issue that falls for consideration is whether in terms of Notification 217/86 or Rule 57A Diaphragms and Air bags which are used in the moulds for giving shape to the tyres can be considered as inputs for the purpose of MODVAT credit or exemption as the case may be. It is an admitted fact that two items are captively consumed and after the use for a number of times the same are discarded. The question that arises in view of this is whether these items can be considered as consumables used in or in relation to the manufacture of the appellants' product for being eligible for the benefit of MODVAT facility. The term 'consume' as defined in the Concise Oxford Dictionary is as under :