Full Judgment
2. On behalf of the appellants the learned Consultant Shri Y.N. Chopra stated that 'Silicone Spray' is an input for the manufacture of plastic moulded components since moulds mounted on injection moulding machines have necessarily to be cooled with Silicone Spray in order to avoid damage to the product due to sticking of the mould to the heated component. He contended that 'Silicone' Spray could not be deemed as tools or appliances which were excluded from the purview of MODVAT credit in terms of the 'Explanation' to Rule 57A. In support of his case the learned Consultant cited the following case law :-CCE v. Eastend Paper Industries Ltd. (ii) CCE v. Hindustan Development Corporation -1990 (47) E.L.T. 376 (Tri.) (iii) CCE v. Weldekar Laminates Pvt. Ltd. -1990 (49) E.L.T. 538 (Tri.) 3. Shri Rakesh Bhatia, learned SDR contended that Silicone Spray cannot be deemed as an input for the manufacture of plastic moulded parts since it was used as a lubricant to facilitate the release of the mould. He claimed being an item for cooling and lubrication of mould, it had to be deemed as akin to equipment or tools which are excluded from the purview of MODVAT in terms of Explanation to Rule 57A.4. The short point for consideration in this case is whether 'Silicone Spray" used for facilitating the detachment of the component from the moulds during the production of plastic moulded components on injection moulding machines can be considered as an 'input' used in or in relation to the manufacture of the final product viz. Plastic Moulded parts or it would be excluded from the purview of MODVAT credit in terms of the 'Explanation' to Rule 57A which reads as under : (a) inputs which are manufactured and used within the factory of production, in or in relation to, the manufacture of final product, and (i) machines, machinery plant, equipment, apparatus, tools or appliances used for producing or processing of any goods or for bringing about any change in any substance in or in relation to the manufacture of the final product.
5. It is seen that the lower authorities have held that 'Silicone Spray" being an item for facilitating the release of the mould is functionally akin to an appliance used for the production or processing of goods and cannot be deemed as 'goods' used in or in relation to the manufacture of the final product. In this regard I find that in the case of Collector of Central Excise v. Weldekar Laminates Pvt. Ltd. reported in 1990 (49) E.L.T. 538 the Tribunal while examining the eligibility of BOP Sheets used in the manufacture of decorative laminated sheets had examined the scope of the term 'appliance'. The relevant extract from the Tribunal's decision is reproduced below: "In the context of the scientific and technical meanings given in the recognized dictionary, the BOP films which are nothing but films made of synthetic resins cannot be construed as either an apparatus or an equipment or an appliance. Moreover, seeing the samples produced of the films both before usage in lamination and after usage, we find that film loses its identity completely and becomes skin to a translucent paper. Hence we are convinced that these films get partly consumed in the process of lamination. Though, no doubt, they are retrieved and do not form part of the final product, they lose their identity. We do not subscribe to the view that for availing MOD VAT scheme the input should form part of the final product because MOD VAT scheme extends even to packing materials and the requirement is only that the inputs should be used in or in relation to the manufacture of the final product. In view of these considerations, we find that the order of the Collector (Appeals) does not call for any interference. Incidentally we also observe that the benefit was given to these films under Rule 56A, where requirements are more restricted than the MODVAT scheme and that has not been challenged by the Department, when the Collector (Appeals) held that they are inputs for producing lamination. We are, therefore, unable to appreciate the challenge now made with regard to the eligibility of the same inputs under MODVAT scheme. We make this observation, in the passing, and would like to make it clear that even viewing strictly the eligibility under Rule 57A, we are the satisfied that the inputs, namely BOPP film used in the manufacture of laminates is eligible for MODVAT credit. We, therefore, dismiss the appeal of the department and sustain the order of the Collector (Appeals) on merits."Collector of Central Excise v.Heavy Engineering Corporation Ltd. reported in 1990 (49) E.L.T. 531 the Tribunal had held that Oxygen and Acetylene gases used for cutting runners and risers in castings were goods used in the manufacturing process and could not be excluded from the scope of the term inputs in terms of the Explanation clause of Rule 57A.7. The appellants have furnished a write-up on the application of 'Silicone Spray' in the process of injection moulding. It has been stated that application of Silicone Spray provides a fine film of Silicone oil on the surface of the mould which provides lubrication and results in the automatic release of the moulded component from the cavity and contributes to better productivity. It has also been pointed out that spraying of silicone along with Freon gas facilitates the release of the component from the mould surface due to evaporation of Freon and lubrication provided by Silicone.
8. Having regard to the scientific and technical meaning of the term 'appliance' which was referred to in the Tribunals decision in the case of Collector of Central Excise v. Weldekar Laminates (supra) and even on the basis of the common understanding of the term 'appliance', I am of the view that 'Silicone Spray' which is in the nature of chemical cannot be deemed as an 'appliance' or 'equipment' which are excluded from the purview of the MODVAT scheme in terms of the 'Explanation' to the Notification No. 217/86. In a number of decisions of the Tribunal it has been held that for availing MODVAT it is not necessary that the input should form a part of the final product. For these reasons and also for the reason that use of 'Silicone Spray' on the moulds during the injection moulding adds to the output of the machine and improves the quality of the moulded product, it has to be held that it is an input used in the manufacture of the final product.
9. In view of the above discussion and on the ratio of the Tribunal's decision quoted above the impugned orders are set aside and appeals are allowed with consequential relief to the appellants.