Full Judgment
2. When the matter was called no none was present on behalf of the Respondents of inspite of notice. I also observe that the Respondents had never earlier appeared when the matter was posted for hearing. I, therefore, take the appeal for disposal after hearing Shri S.C.Pushkarna, Ld. DR, and after persuing the records including the Cross Objections, filed by the Respondents.
3. The Ld. Dr reiterated the grounds as contained in Memorandum of Appeal wherein it is mentioned that the impugned goods are not inputs under Rule 57A as these are not used in or in relation to the manufacture of final products; that these are used merely for maintenance of the machinery installed. Reliance was placed on the decision in the case of Kanoria Suger & General Mfg Co. Vs. CCE Allahabad 1986 (87) ELT 522 (T) wherein it was held that any inputs merely making for better operation of the machinery are to remain outside the madvat credit scheme.
4. I have considered the submissions of the 1d. DR and perused the records. I observe from the Adjudication Order No. 58/98, 21-5-98 that the impugned goods were used as coolent to cooldown the machines inturning and grinding operations. For the purpose of availing of Modvat Credit under Rule 57/A, it is not necessary that the inputs should form the part of the final product itself as the same could be used directly or indirectly in or in relation to the manufacture of the final product. The Larger Bench of the Tribunal in case of CCE Meerut Vs. Modi Rubber Ltd. 2000(119) ELT 197 has held, while considering the eligibility of lubricants for the input credit under Rule 57A, that unless the machinery is lubricated with the lubricants heat will be generated on account of mechanical heat will be generated on account of mechanical friction between the working surfaces of the machinery leading to adverse consequences affection the process of manufacture and that these facts could suffice to hold that lubricants of the machines is essential for their working and, for that mater, for the smooth process of manufacture of final product. The Tribunal also observed that it does not "matter" whether the goods are used in the machinery or for the purpose of the machinery,' The Tribunal came to the conclusion that lubrication of machinery is an activity which is concerned with or pertaining to the manufacture of the finished goods.
It is rather integrally connected with the manufacture. The use of lubricants in the machinery is certainly in or in relation to the manufacture of the finished product. In the present matter it is not denied by the Revenue that the impugned goods are used as coolent in turning and grinding operations which shows clearly that these are used in relation to the manufacture of the final goods. Following the ratio of the Larger Bench decision I hold that the input credit is admissible in respect of impugned goods and accordingly the appeal filed by the Revenue is rejected. The Cross Objection, filed by the Respondent, is also disposed of in the above terms.