( 1 ) THE Customs, Excise and Gold (Control) Appellate Tribunal has referred the following questions arising out of its order dated 24-5-1993. " (1) Whether on the facts and in the circumstances of the case the Appellate Tribunal is right in law in holding that the applicant are not eligible to MODVAT credit in respect of ramming Mass, Fibreglass and filter mesh used in or in relation to the manufacture of pistons on the ground that they are covered under proviso to Rule 57-A of the Central Excise Rules, 1944. (2) Whether on the facts and in the circumstances of the case the Appellate Tribunal is right in law in rejecting the MODVAT credit on rejected pistons which are recycled in the manufacture of pistons".

( 2 ) THE facts of the case are that the assessee claimed benefit of modvat credit in respect of ramming mass. The Tribunal found that for an item to pass the test of eligibility to the benefit of the MODVAT credit it will be seen that they participate in the process of manufacture without which the end product cannot be produced. In processed materials which are used either in the preparatory stage for getting the materials ready for manufacture or which are used to render the finished product marketable would be eligible for the benefit of MODVAT credit. This would include materials used in relation to the manufacture of the in-process materials which ultimately go into the manufacturing stream. In view of the consistent view taken by majority of the Benches, it was held that MODVAT credit for ramming mass cannot be allowed. In respect of filter mesh it was observed that, Fibreglass filter mesh is primarily used to remove the oxide inclusions from the molten alloy melts. Unless this is done, the inclusions would get into the castings and render it unutilisable. The filter mesh has a resin coating. This resin becomes a part of the finished product. During the piston blank casting manufacture the aluminium alloy enters the outer mould through the filter mesh. The size of mesh opening is designed in such a way that it permits filtering of the inclusion while at the same time ensuring that the optimum rate of filling of the mould is not affected. After the casting is solidified and is taken out, the fettling operations are carried out and the filter mesh used remains a part of the riser which is remelted. Thus the filter mesh becomes a molten metal charge which is used for making finished part. One piece of filter mesh is used per casting. Thus, this is an input used in the manufacture of the finished product.

( 3 ) LEARNED Counsel for the assessee submitted that in accordance with the provisions of Rule 57-B of the Central Excise Rules, 1944 have to be interpreted so as to advance the object of benefit of MODVAT in respect of inputs and cannot be restricted to components of the raw materials of the finished product which has gone into production of final product. It is submitted that the word "in relation to the manufacture" has extended the meaning of input and therefore, any item which is used as an input in relation to the manufacture is eligible for MODVAT. Provision of Rule 57-B are as under: "provided that the Central Government may specify the goods or classes of goods in respect of which the credit of specified duty may be restricted. Explanation. For the purposes of this rule, "inputs" includes (A) inputs which are manufactured and used within the factory of production, in or in relation to, the manufacture of final products, (B) paints and packaging materials, (C) inputs used as fuel, (D) inputs used for generation of electricity, used within the factory of production for manufacture of final products or for any other purpose, and (E) accessories of the final product cleared along with such final product, the value of which is included in the assessable value of the final product, but does not include (I) machines, machinery, plant, equipment, apparatus, tools, appliances or capital goods as def