Full Judgment
Grinding takes place on account of the impact of Steel Balls on the raw materials. A part of the Steel Balls on account of severe impact gets damaged and particles and pieces of Steel balls are mixed together with the powdered raw materials and become part of the final product; this takes place though not intended. However, for this reason Steel balls cannot be regarded as raw materials, though they are, to a small extent, consumed and enter the final product.
It can be safely held that they are used in or at any rate, in relation to the manufacture of the final product and hence "inputs".
11. Ball machine without Steel Balls placed in it is a Machine complete in it-self; it is not an incomplete Machine. Just as any complete Machine may require to be fed consumables or other goods for it to perform its functions, Ball Machine requires Steel balls to be placed inside the drum in order that it perform its functions.
That does not make Steel balls components or parts of Ball Mill.
They are not accessories in the sense that they are additional attachments or otherwise enhance the performance or utility of Ball Mill. They are goods the use of which in Ball Mill is essential for the latter's performance. Light is also thrown by the Note in HSN that balls are classified according to their constituent material and not as parts. It must also be noticed that Steel Balls are not attached or fixed to the Ball Mill. As pointed out, Ball Mill will commence operation and drum will start rolling or moving, but grinding will taken place only if Steel Balls are present. Thus Steel Balls cannot be regarded as parts of Ball Mill. They are not, in or by themselves, machine or machinery or appliance or tools or the like as they are not self-contained or complete units or group or assembly of parts as explained in Union Carbide India Ltd. v. Collector of Central Excise - 1996 (86) E.L.T. 613 (Tribunal). They are also not part of such goods as indicated already. Even assuming Steel Balls are part of machine or machinery, parts are not covered by exclusion Clause (i) of the Explanation to Rule 57A of the Rules as held in Union Carbide India Ltd. case, 1996 (86) E.L.T. 613 (Tribunal). It is thus clear that Steel Balls are "inputs" and not excluded by exclusion Clause (i) and therefore, Modvat credit is admissible. The reasoning in Electrosteel Castings Ltd., 1989 (43) E.L.T. 305, is with respect, not correct. The distinction drawn in Magnetix (India) Ltd. case - 1996 (86) E.L.T. 317 (Tribunal) with reference to the decision in S Casting Ltd. case, 1989 (43) E.L.T. 305 (Tribunal) is, with respect, not correct. The decision in M/s.
Associated Cement Co. Ltd. (Appeal No. E/216/91) is per incurium inasmuch as the earlier decisions and relevant aspects and technical literature were not brought to the notice of the Bench which decided the appeal." 2. The statements so made by the Larger Bench is binding on us. We do not find any ground to doubt the same for being referred to a Larger Bench of 5-Member.
3. In view of what has been stated above, since the issue raised in this appeal is covered by earlier decision referred to above, the appeal is disposed of in terms of that decision.