Full Judgment
3. The learned DR draws our attention to the orders of the Tribunal in the case of C.C.E., Mum-bai v. B.K. Paper MillsC.C.E., Baroda v.Atlas Paper MillsC.C.E., Aurangabad v. Shree Vindhya Paper Mills 1999 (114) E.L.T. 320 in which similar questions have already been referred and he also submits that the Larger Bench decision in the case of Union Carbide which has been relied upon in the present final order, has itself been referred to the jurisdictional High Court. He therefore, prays that the Reference Application may be allowed.
4. The prayer is opposed by the learned Counsel Shri M.L. Lahoty who submits that the question has been decided by the Hon'ble Patna High Court in the case of C.C.E., Patna v. TELCO reported in 1999 (111) E.L.T. 9 (Pat) wherein the Court has held in para 35 that it agrees with the findings recorded by the Larger Bench of the Tribunal in the case of Union Carbide India v. C.C.E. 1996 (86) E.L.T. 613 holding that Felts, Phosphor Bronze, Stainless Steel Wire Cloth, Wire Mesh and Dandy cloth used as parts in machine or machinery in the manufacture of paper and paper products are eligible inputs. He submits that in a recent decision in the case of Ghataprabha Paper & Board Mills Pvt. Ltd. v.C.C.E. reported in [2000 (117) E.L.T. 552], the Larger Bench of the Tribunal has followed the Patna High Court order in the case of TELCO and allowed the appeal of the assessee. He therefore, submits that no question of law requiring reference arises from the Tribunal's Final order and urges us to reject the application.
5. We have carefully considered the rival submissions. We have carefully perused the Patna High Court judgment in the case of TELCO supra. The two questions referred to the Hon'ble High Court are as follows : "(i) Whether provision of limitation as prescribed under Section 11A of the Central Excises and Salt Act, 1944 which relates to demand of duty not levied, not paid, short-levied, short-paid or refunds erroneously granted and does not relate to credit of duty can be engrafted in Rule 57-I of the Central Excise Rules, 1944 for disallowing credit and whether Section 11A will override Rule 57-I (ii) Whether decision in Collector's conference observing application of time-limit prescribed in Section 11A for the recovery of wrong credit taken in terms of provisions of Rule is binding when there is no time-limit prescribed in Rule 57-I itself 6. These questions have been answered by the High Court in para 37. The question as to whether Modvat credit is admissible on the items in dispute which are used as parts of machine or machinery in the manufacture of paper and paper products, was not referred to the Hon'ble Patna High Court. In view of this and in view of the fact that identical issue as in this case, has already been referred to various High Courts, as seen from the Tribunal's Reference orders cited supra, we agree with the Revenue that this is a fit case for reference of the question of law framed in the application and hence refer the following question for decision by the Hon'ble Madhya Pradesh High Court: "Whether the items (i) Dandy Covers (ii) Dryer Felt, Press Felt, Industrial Cloth and (iii) Synthetic Wire, which are replaceable attachments to the paper making machinery and are used as parts for the functional operation of machine and can be said to be inputs in or in relation to the manufacture of the product or would get excluded from the purview of Modvat Scheme by virtue of explanation to Rule 57-A of Central Excise Rules."