Modvat credit on weighing machine and PVC mist eliminator upheld as capital goods under Rule 57Q.

Modvat credit was admissible on a weighing machine used for weighment of cotton yarn before packing and clearance, because the product was treated as finished only after packing and the machine qualified as capital goods under Rule 57Q. Modvat credit was also admissible on a PVC mist eliminator, as it was treated as a part or accessory of the humidification plant, and the plant itself had been accepted as capital goods. The Department's challenge therefore failed on both items.

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Issues: Whether Modvat credit was admissible on a weighing machine and on a PVC mist eliminator under Rule 57Q.

Analysis: The weighing machine was used for weighment of cotton yarn before packing and clearance, and the product became finished only after packing. On these facts, it was treated as capital goods eligible for Modvat credit under Rule 57Q. The PVC mist eliminator was held to be a part or accessory of the humidification plant. Since the humidifier was itself treated as capital goods, the accessory could not be excluded from the scope of Rule 57Q.

Conclusion: Modvat credit was admissible on both items and the Department's challenge failed.

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