Capital goods under Rule 57Q include machinery parts used in manufacture, making Modvat credit admissible.

Guide Bracket and Crank Disc, as parts of machinery used in the manufacturing process, fall within the inclusive definition of capital goods under Explanation I to Rule 57Q of the Central Excise Rules, 1944. Because the provision covers components, spare parts and accessories of machines, machinery, plant and equipment used for producing or processing goods or for effecting a change in a substance for manufacture, the items were treated as eligible capital goods. Reliance on the Larger Bench decision also supported this construction, and Modvat credit was therefore admissible to the assessee.

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Issues: Whether Guide Bracket and Crank Disc, being parts of machinery used in the manufacturing process, qualified as capital goods for availment of Modvat credit under Rule 57Q of the Central Excise Rules, 1944.

Analysis: The items were found to be parts of machinery and their function brought them within the inclusive definition of capital goods in Explanation I to Rule 57Q, which covers components, spare parts and accessories of machines, machinery, plant and equipment used for producing or processing goods or for bringing about a change in any substance for manufacture of final products. The Larger Bench decision relied upon also supported the respondents' entitlement.

Conclusion: The items qualified as capital goods and the Modvat credit was admissible in favour of the assessee.

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