Modvat credit on functional machine parts under Rule 57Q sustained where motors, cables and brushes qualified as capital goods components.

Rule 57Q Modvat credit was held admissible on electric motors, gear motors, wires, cables and carbon brushes because the items were functionally used to operate the machinery and fell within the scope of capital goods or their parts. Wires and cables were treated as carrying electric current to the machines, while electric and gear motors served as drives to the machines; that functional finding was not disputed. Carbon brushes were accepted as parts of the overhead blower, and since credit on the blower itself was not in dispute, its parts also qualified for credit. The Revenue's challenge failed and the credit allowed by the appellate authority was sustained.

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Issues: Whether Modvat credit under Rule 57Q of the Central Excise Rules, 1944 was admissible on electric motors, gear motors, wires and cables, and carbon brushes as capital goods or parts thereof.

Analysis: The dispute turned on the scope of capital goods under Rule 57Q. The finding that wires and cables carried electric current to the machines, and that electric and gear motors acted as drives to the machines, brought those items within the functional ambit of capital goods. That factual finding was not disputed. As to carbon brushes, they were found to be parts of the overhead blower, and credit on the blower itself was not in dispute. If the blower qualified for Modvat credit as capital goods, its parts also qualified for the same benefit.

Conclusion: Modvat credit was admissible on the items in question, and the Revenue's challenge failed.

Final Conclusion: The appeal was rejected and the benefit of Modvat credit allowed by the appellate authority was sustained.

Ratio Decidendi: Items functionally used to operate machinery, and parts of capital goods that themselves qualify for Modvat credit, fall within the beneficial scope of Rule 57Q.

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