CCE Vs. INDIAN ADDITIVES LTD.

JUDGEMENT

(1.) This appeal filed by the Revenue is directed against the Order -in -Appeal No. 339/97 (M) dated 25.11.1997 passed by the Commissioner of Central Excise (Appeals), Madras whereby he has allowed the appeal filed by the assessee against the Order -in -Original No. 63/96 dated 15.4.96 by which the original authority had disallowed Modvat Credit taken on the item viz. "MBH Standard Reference Materials" and ordered the assessee to expunge credit of Rs. 78,970.

(2.) The brief facts of the case are that the assessee -respondents herein are manufacturers of Lubricating oil and additives falling under sub -heading 3811.00 of theCETA, 1985. The assessee originally filed a declaration No. 8/95 dated 27.10.95 under Rule 57G of the CE Rules, 1944 declaring the product "MBH Standard reference materials" as one of the inputs. Subsequently they revised the declaration and filed a declaration under Rule 57T of the CETA for the goods as capital goods on the ground that they are accessory of Inductively Coupled Plasma Vacuum Type Direct reading Spectrometer (SCP). In the write up submitted, the assessee stated that the subject materials which are imported were used to calibrate the above instruments used for analysing elements in the lube additive products and further stated that without these standard materials the instrument could not be calibrated and could not be put to use. The objection of the department was that the reference material is neither an input used directly or indirectly in the manufacture of the final product nor was it a capital goods. The Commissioner (Appeals) has held that these materials are essential for calibrating the Spectrometer as without proper calibration the Spectrometer cannot give accurate results. He has further held that the Standard chemicals provide conditions for accurate functioning of the Spectrometer and on that ground he allowed the appeal of the respondents -assessee. Aggrieved by the said order of the Commissioner (Appeals), the Revenue has come in appeal on the following grounds:

(3.) Heard Shri A. Jayachandran, learned DR who reiterated the grounds of appeal. He has also cited the ruling of the CEGAT in the case of CCE v. Fourts (India) Ltd., 1997 (92) ELT 231 (T) and in the case of CCE Coimbatore v. Shanmugaraja Spinning Mills (P) Ltd., 1997 (89) ELT 84 (T) wherein it was held that the goods must directly participate in the manufacturing stream. He therefore, sought for setting aside the impugned order and allowing the appeal.