1. The issue involved in this appeal tiled by M/s Groz Beckert Asia Ltd, is whether the Modvat Credit is available in respect of Tempering Oil, Cutting Oil and Nickel Catalyst under Rule 57A of the Central Excise Rules.
2. Shri. K.K.Anand, ld. Advocate mentioned that he is not pressing matter regarding availability of credit in respect of Nickel Catalyst.
He submitted that tempering oil is used in tempering process during the manufacture of Hosiery and Knitting Machines needle; that the oil is employed as heat transfer medium for indirect heating of needle in the process called tempering; that the hardened needles after quenching are kept for certain time in hot oil bath having temperature up to 275 degree C; that due to this process stresses are relieved and needle acquire more toughness. He, further, explained that cutting oil is used for the slot cutting in the Needle; that every needle is required to have a slot and during the process of slotting, cutting oil is continuously poured on to the needle so that a proper and smooth slot is cut. He, therefore, submitted that both these oils are used in or in relation to the manufacture of the final product and as such are eligible for modvat credit; that the Additional Commissioner has dis-allowed the Modvat Credit holding only that the impugned oils were not used as fuel. I also heard shri. S.C.Pushkarna, Ld. DR. (sic) 3. I have considered the submission of both the sides. The Ld. Advocate has explained the use of both tempering oil and cutting oil in the process of manufacture of their final product namely Hosiery and Knitting Needle. It is apparent from the use explained by him that both the impugned oils are used in relation to the manufacture of the final product and as such it cannot be said that these have not been used in relation to the manufacture of the final product. The Modvat credit under Rule 57A is, therefore, eligible in respect of both these products. The ld, Advocate for the allellants has not pressed for allowing the credit in respect of Nickel Catalyst and as such the impugned Order dis-allowing the credit in respect of said item is upheld.4. As the appeal has been partly allowed, the penalty imposed of Rs.2,500/- is also reduced to Rs. 1,000/-