Full Judgment
2. We have heard Shri Yadav, the learned DR who relied upon the Tribunal decision reported in 1996 (85) E.L.T. 80 in the case of Mahindra & Mahindra v. C.C.C., in which it has been held that cutting oil and quenching oil which are used as lubricants in the manufacture of motor vehicle components are neither raw materials nor components and hence not eligible for the benefit of exemption in terms of Notification 201 /79.
3. Shri Kulkarni, learned Chartered Accountant submits that the expression in Rule 57A namely "used in or in relation to the manufacture of" is wider than the language of Notification 201/79 and therefore all inputs which are used either directly or indirectly in or in relation to the manufacture of final product should be held to be eligible for credit.
4. We have considered the submissions of both sides and we see force in the submission of the respondent that the Tribunal decision relied upon by the Learned DR will not be applicable in the present case for the reason that in Notification 201/79 which is considered by the Tribunal, the expression is used as inputs i.e. raw material or components in the manufacture of finished products while the expression in Rule 57A is wider and covers inputs used in or in relation to the manufacture of final products. Therefore the Tribunal's findings in para 6 of the Mahindra & Mahindra order that cutting oil and quenching oil are not raw material or components will not operate so as to hold that they are not inputs used in or in relation to the manufacture of the respondent's final products. The respondent have submitted a write-up explaining the use of quenching oil and cutting oil according to which, in order to get the required hardening for the forging, the forgings are heated to 700C and then directly quenched/dipped in the quenching oil and the transformation from high temperature to ambient temperature makes the forging quite hard and increases their tensile strength. As far as cutting oil, due to excess heating of accessories during high speed rotation of forgings, there are chances of inserts breaking and getting entrapped into the forgings and therefore in order to maintain the normal temperature, cutting oil is used which is continuously poured on cutting tool or grinding wheel. From the explanation of, usage of these items and having regard to the wider language of Rule 57A we hold that there is no infirmity in the lower authorities order extending credit on these items and uphold the same and reject the appeal.