COMMISSIONER OF CENTRAL EXCISE Vs. BSSK LTD.

JUDGEMENT

(1.) This is a revenue appeal against the Order -in -Appeal No. 801/01 dtd. 14.12.2001. The Commissioner (Appeals) has granted benefit of modvat credit in respect of lubricants used for maintenance of machinery in terms of the Tribunal judgment rendered in the case of Sushila Steel [1998 (98) ELT 237) and it is the Revenue contention that lubricating oil used for maintenance of machineries cannot be considered as an input for the claim of modvat credit.

(2.) Ld. DR pointed out that the Larger Bench in the case of Jaypee Rewa Plant Vs. CCE, Raipur 2003 (57) RLT 739 has observed that welding electrodes and gases (oxygen and acetylene) used in the repair and maintenance of plant and machinery cannot be considered as eligible inputs as the same are not used in relation to manufacture of final product. He draws reference to this judgment to be applied to the present case also with regard to the lubricating oil.

(3.) On the other hand, Ld. Consultant Files a list of judgments and submits that the issue pertaining to lubricating oil and greases used for the purpose of lubricating the machines and machinery which were used for manufacture of final product was considered by Larger Bench in the case of CCE Vs. Modi Rubber Ltd. 2000 (119) ELT 97 and have clearly held that unless the machinery of the assessee are lubricated with the lubricants, heat will be generated on account of mechanical friction between the working surfaces of the machinery leading to adverse consequences affecting the process of manufacture. It has been held that friction and the resultant heat are also sure to damage the machinery. These facts would suffice to hold that lubrication of the machines and machinery is essential for their working and for the matter, for the smooth process of manufacture of final products. It has been held that use of lubricants in machinery is certainly in or in relation to the manufacture of finished products. He distinguishes the judgment rendered in the case of Jaypee Rewa Plant, which was with respect to welding electrodes and gases which was held to be not eligible inputs. He submits that as the issue pertaining to lubricating oil has already been decided by the Larger Bench, the appeal is required to be rejected.