R. Jayaraman, Member (T)

1. This is an appeal filed by the Collector of Central Excise, Bombay-Ill, against the order of the Collector of Central Excise (Appeals) bearing No. AMP-465/B-III-215/88 dated 22-7-1988 allowing the appeal of the respondents on merits.

2. Brief facts of the case for the purpose of disposal of this appeal can be stated as below.

3. The respondents are the manufacturers of decorative laminate sheets falling under Heading 39 of the Central Excise Tariff. They were receiving duty paid BOPP films classifiable under sub-heading 3902.31 for use in the manufacture of laminated sheets. They had availed of credit of duty paid on these films, since both the final product and the input were notified under the MOD VAT scheme. The department objected to the availment of the credit of the duty paid on these films used in the manufacture of laminated sheets on the ground that these films act as separators, while putting the sheets into the press and do not constitute as an input in the manufacturing process. These films prevent two layers of sheets from sticking together and they do not form part of the final product and hence cannot be treated as inputs. This could