K. Sankararaman, Member (T)

1. These two appeals filed respectively by M/s. Hindustan Motors Ltd. and Collector of Central Excise, Calcutta-II, arise from the same order-in-appeal No. 20/Cal-II/90 dated 29-1-1990 passed by the Collector of Central Excise (Appeals), Calcutta, in terms of which the first-mentioned appellants were held to be not eligible for Modvat Credit in Respect of Resins used by them in the manufacture of Sand Moulds, in turn used for producing castings for parts and accessories of motor vehicles. The finding to the above effect was originally that of the Assistant Collector of Central Excise, Rishra which, on appeal by them, was upheld by the Collector (Appeals) in his impugned order. He, however, held that the demand beyond the time-limit of six months was not enforceable. The decision on merits has been challenged by the Company while that on limitation by the Collector, Calcutta-II.

2. S/Shri S.K. Bagaria and J.P. Khaitan, learned Advocates, appeared for the appellants. Shri Bagaria started his argument with the submission that for availing Modvat benefit three conditions are to be satisfied. The first is that both the inputs and the final products should be covered by the relevant Notification namely Notification No. 177/86, dated 1-3-1986. The second is that the inputs should be used in or in relation to the manufacture of the final product. The third is that the inputs should not be covered by the excluded category of inputs mentioned in the Explanation under Rule 57A. He, then, explained the manner of use of the material in question. The inputs in the present case are Resins and the final products are castings. The Resins are used for the preparation of Sand Moulds which is in relation to the manufacture of castings. Sand Moulds are not goods but they constitute a stage in the process of manufacture of castings. Sand, as such, cannot be used for the purpose of casting as it does not have any binding or cohesive property. To give it the necessary binding property for preparing the mould which will have a purely temporary existence inside the mould-box for the duration of the casting process, it has got to be mixed with the Resins. Sand is then temporarily held in shape by the Resin. This shaped Sand is, for the sake of convenience, referred to as Sand Mould. It is not really a mould as normally understood and is incapable of being stored or moved, not to speak of being marketed. The castings are made by pouring the molten metal into a mould-box containing the shaped sand. The molten metal then occupies the gaps in the mould-box left by the shaped sand. After cooling, the metal takes the required shape and is removed from the mould-box by knocking off the sand. The Resins are thus used in shaping the sand which is used in the process of manufacture of the final product, casting.

3. Shri Bagaria, then, explained how the use of Resins, in the preparation of the shaped sand, constitutes use in relation to the manufacture of castings is in conformity with the three requirements referred to by him at the outset. Firstly, the Resins and the final products figure in the Notification No. 177/86 and thus satisfy the first criterion indicated by him. There is no dispute about this position. As regards the second, namely use of Resins in or in relation to the manufacture of castings, he submitted that there is no serious dispute about this. He referred to the decision of the Supreme Court in Collector of Central Excise v. East End Paper Products reported in MANU/SC/0107/1989 : 1989 (43) E.L.T. 201 wherein they had observed that anything that enters into and forms part of the process of manufacture must be deemed to be raw material or component part of the end-product and must be deemed to have been used in completion of manufacture of the end-product. The present case of Modvat is on a better footing in view of the use of the enlarged expression, "used in or in relation to the manufacture" unlike the other expr