Judgment:
1. The short question that arises for consideration in this appeal is as to whether appellant is entitled for the benefit of modvat credit on the lubricant oil used for maintenance of equipment and machinery. The Asst. Commissioner in the order held that the lubricating oil is not used in or in relation to the manufacture of the final product and hence confirmed the amount of Rs.1,70672/-. He has not examined the issue in the light of the details given in para-2 o his order as to how the oil is used in machinery and its function and the judgement which are cited are not entitled to benefit. A similar order has been passed by the lower appellate authority giving rise t grievance on the part of the appellants that there is no applicability of mind by both the authorities.
2. Ld. Counsel Shri Ignatius for the appellants submits that the issue is no longer res integra in as much as that the matter pertains to grant of modvat credit on lubricating oil in use of machineries to keep the machine working has been gone into in great detail by the Larger Bench of the Tribunal in the case of CCE Vs MODI RUBBER LTD reported in 2000 (119) LET 197 (T-LB). It has been clearly laid down therein the at unless the machinery of the assessee are lubricated with the lubricants, heat will be generated on account of mechanical friction between the working surfaces of the machinery leading to adverse consequences affecting t he process of manufacture. It has been noted that the friction and the resultant heat are also sure to cause damage to the machinery. It his held these facts would suffice to hold that lubrication o f the machines and machinery is essential for their working and, for that matte, for the smooth process of manufacture of final products. The lubricants use for better operation of the machines is required to be treated as for used integrally connected with the manufacture. Ld. Counsel submits that the issue having been put to rest, the ratio requires to be applied and appeal to be allowed.
3. Ld. SDR Shri G.S. Menon submits that the department has not accepted the Tribunal judgement and the matter is being taken up before the Apex Court and hence appeal could be kept pending till such time the issue is decided by the Apex Court.
4. On careful consideration of the submissions, IN notice that there is no stay given by the Hon'ble Apex Court. There is no material placed the Revenue has filed any appeal against the larger bench judgement granting benefit to the lubricating oil used for the purpose of lubricating the machines and machinery which were used of manufacture of the final product.
5. In so far as the HSD oil is concerned, the Tribunal judgement was not accepted and by Finance Act, 2000 through Parliamentary Legislation deny in the benefit with retrospective effect. Such a decision has not been taken in so far as the Lubricating Oil and Greases are concerned and no amendment has been brought in the Finance Bill 2001. For the reason, there is no ground for keeping these appeals pertaining to grant of modvat credit on lubricating oil in abeyance.
6. In the result, the impugned order is set aside and appeal allowed with consequential relief, if any,a as per law.