V.P. Gulati, Member (T)

1. This appeal is against the order of the Collector of Central Excise (Appeals), Madras. The Collector of Central Excise, Coimbatore is aggrieved of the decision of the learned Collector (Appeals) in allowing the benefit of MODVAT Credit in respect of anti-rust oil and electroplating salts. The learned Collector (Appeals) has held as under :

"On going through the above submission, I find that the usage of chemicals is more or less akin to the usage of Rust Preventive oil, which the lower authority has considered as an input, equating it to paint. While the anti-rust preventive oil is used to keep the fully manufactured bearings free from rust, the chemicals are used during the course of manufacture of Bearing themselves. The chemicals are claimed to constitute a plated overlay on bearings, which is nothing but equivalent to quoting with paint. Their usage over a period of time is of no consequence. Therefore, chemicals can hardly be termed as "Capital Goods" and equated to surface grinders. Moreover, the term "capital goods" would apply on lay to "goods" capable of producing goods. The impugned order being one based on a ground which cannot be sustained,