Marketability-linked manufacture: equipment used to move goods into a marketable stage qualifies for Modvat credit.

Equipment used to move sugar from the godown to the loading point was treated as used in the process of manufacture because an activity necessary to make the final product marketable forms part of manufacture. On that basis, the portable truck loading unit fell within capital goods eligible for Modvat credit under Rule 57Q of the Central Excise Rules, 1944, and the Revenue's challenge failed.

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Issues: Whether Portable Truck Loading Unit used for transporting sugar from the godown to the loading point and then to the vehicle qualified as capital goods used in the manufacture of sugar for the purpose of Modvat credit under Rule 57Q of the Central Excise Rules, 1944.

Analysis: Activity undertaken by a manufacturer to make the final product marketable forms part of the process of manufacture. Transportation of sugar from the godown to the loading point was necessary to place the goods in a marketable stage. Goods used for such transportation were therefore treated as used in the manufacture of the final product and fell within the scope of capital goods eligible for Modvat credit.

Conclusion: The unit qualified for Modvat credit under Rule 57Q and the Revenue's challenge failed.

Ratio Decidendi: Any equipment used in an activity necessary to make the manufactured goods marketable is treated as used in the process of manufacture for the purposes of Modvat credit.

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