R. Jayaraman, Member (T)

1. All the three appeals involve consideration of the same issue. Hence they were heard together and proposed to be dealt with by this common order.

2. The above appeals are against the orders of the Collector (Appeals) as indicated below:

3(1) The common issue in all the three appeals is whether Modvat Credit is admissible in respect of metallic wire netting of Phosphor Bronze and Dryer felt of woollen cloth, which are declared as inputs used in or in relation to the manufacture of paper.

3(2) The appellants filed declaration under Rule 57A declaring inter alia the aforesaid two items as inputs used in or in relation to the manufacture of paper. However, the Department issued a number of Show Cause Notices (reportedly within time limit prescribed) alleging that these items are part and parcel of their machinery and not correlated in relation with the manufacturing process. The Asstt. Collector confirmed the demands for reversal of Modvat Credit, holding that these items are not consumables but are used in removing water from the pulp and in drying as parts of machinery. On appeals before the Collector (Appeals), their appeals were rejected. The Collector (A) has gone through the manufacturing process and held that wire net is mainly used to carry the layer of pulp to give the required width and to drain out the water content and the felt is used to carry the paper web, to squeeze the paper web through the roller press and further carry it upto the drier. Hence, they are essential parts of machine for processing and for making paper. Hence they are excluded as per explanation to Rule 57A and are, therefore, not eligible for Modvat benefit. On rejection of the appeals by the Collector (A) in the aforesaid three separate orders, the appellants have come up in appeals before us.

4(1). Undisputed factual position regarding the usage of the two items is as below:

(i) Wire net: This is fitted and wound over the rollers of paper making machine, known as Fodineer machine. First, pulp is spread over the wire net so as to form a uniform layer of pulp. Thereafter, it is fitted on the rollers of the machine and during its forward movement water gets drained out. Near the end of the wire net, vacuum boxes are fitted to squeeze out the water content. Thus wet paper is formed at the end of the wire net, which is called paper web.

(ii) Felt : Paper web is thereafter carried by felt as a conveyer belt to squeeze rollers, dryer and calender. Water is completely removed from paper web-carried by felt, which passes through squeezing rollers, dryer and calender.

4(2) Both the items of prescribed specification and quality for paper making, though not supplied with machine by manufacturers of machine, are bought out items and are replaced after a period of usage, depending on the extent of usage on the machine for the above purpose.

5(1) On the basis of the above undisputed factual position, it would appear to us that they are replaceable attachments to the paper making machinery and they are replaced after a period of usage. In the case of such items used as attachments/parts of the machines, we have been taking the view that they are used as parts for the functional operation of the machine and cannot be said to be 'inputs' used in or in relation to the manufacture of the product. These are attached as parts of machines for producing or processing of goods and hence would get excluded from the purview of Modvat scheme by virtue of explanation to Rule 57A.

5(2) In a case decided by this Bench in appeals E/631/90-Bom. and E/641/90-Bom. filed by M/s. Poysha Ind. Co. Ltd., (vide our order No. 179-180/91-WRB dated 22-2-1991), we dealt with lithographic plates and rubber blankets used as attachments to printing machine for printing tin plates and ruled out their eligibility for Modvat Credit claimed for use in tin containers. In that decision, we took note of the Southern Bench's decision in the case of Andhra Pradesh Paper Mills -MA