V.P. Gulati, Member (T)

1. This is an appeal against the order of the Collector of Central Excise (Appeals), Ma8ras, dated 29-7-88.

2. The short point that arises for determination is whether the appellants are eligible to take MODVAT credit in respect of anti-rust and anti-corrosion oil which is applied on the finished tools. The learned lower appellate authority in this context has held as under:

"It is not used in manufacture or in relation to manufacture but is applied after the tools are manufactured for preservation. Therefore, it cannot be considered an input used in or in relation to manufacture. The learned consultant's view that manufacture is complete when the oil is applied and not before is not acceptable. The tools are complete tools, with or without such oils."

3. The learned Consultant pleaded that the application of the anti-rust and anti-corrosion oil is as a preventive measure to prevent the rust and corrosion of the tools after they have been manufactured. He has pleaded that this is an essential operation to be carried out in the factory and the goods are sold only after applying this oil. He has stated that the goods are also accounted for in the RG.I registe