Wide construction of "plant" allowed Modvat credit on UPS parts, kiln insulation and grinding media as eligible capital goods and inputs.

Modvat credit was admissible on fibre glass shutter, Gypon terminal, ceramic fibre blanket, grinding elements and grinding media. The Tribunal applied a wide construction of "plant" in the capital goods definition, holding that items necessary to make the manufacturing process possible, even if they do not directly enter the final product, qualify as capital goods; on that basis, the UPS-related items and the kiln insulation blanket were covered. Credit on grinding elements and grinding media was also allowed as inputs, consistent with the cited precedent. The Revenue's appeal therefore failed.

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Issues: Whether Modvat credit was admissible on fibre glass shutter and Gypon terminal as capital goods, on ceramic fibre blanket as capital goods, and on grinding elements and grinding media as inputs.

Analysis: The items used as parts of the UPS system to regulate power supply to the machines were treated as falling within the wider meaning of "plant" in the definition of capital goods, since goods necessary to make the production process possible are covered even if they do not directly enter the manufacture of final goods. The ceramic fibre blanket, used in kiln heat insulation, was also held to be covered by the same principle. For grinding elements and grinding media, credit had already been claimed as inputs, and the cited precedent supported admissibility of credit on those items under the inputs provision.

Conclusion: Modvat credit on all the disputed items was held admissible, and the Revenue's appeal failed.

Ratio Decidendi: The expression "plant" in the definition of capital goods receives a wide construction and covers goods necessary to make the manufacturing process possible; items qualifying as such, and materials used as inputs in manufacture, are eligible for Modvat credit.

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