Modvat credit on capital goods: machinery-related items qualified, while winding wires were excluded under Rule 57Q.

Rule 57Q treated capital goods as including machines, machinery, plant, equipment, apparatus, tools, appliances, and the components, spare parts and accessories of such goods used in producing or processing goods. On that basis, 3 Phase A.C. Electric Motors, GOU Strag Seat Button, Electric Fan and M.H. Equipment Conveyor Spares were regarded as capital goods and qualified for Modvat credit. Winding wires of all types were used only in winding electric motor transformers, coils and similar items, and were not covered by any limb of the definition, so credit was not available on those items.

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Issues: Whether Modvat credit under Rule 57Q was admissible on the disputed items claimed as capital goods.

Analysis: Rule 57Q defines capital goods to include machines, machinery, plant, equipment, apparatus, tools or appliances used for producing or processing goods, as well as components, spare parts and accessories of such goods. On the nature of use disclosed in the record, 3 Phase A.C. Electric Motors, GOU Strag Seat Button, Electric Fan and M.H. Equipment Conveyor Spares were treated as falling within the definition of capital goods and were therefore eligible for credit. By contrast, winding wires of all types were found to be used only in winding electric motor transformers, coils and similar items, and were held not to satisfy any limb of the definition.

Conclusion: Modvat credit was admissible on 3 Phase A.C. Electric Motors, GOU Strag Seat Button, Electric Fan and M.H. Equipment Conveyor Spares, but inadmissible on winding wires of all types.

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