Capital goods eligibility depends on functional use in manufacture; a water tank failed for lack of nexus with production.

Eligibility as capital goods under Rule 57Q turns on the item's functional use in the manufacturing process. A water tank used to store water for softening and supply to a cooling tower did not qualify because the record did not establish a clear nexus between the stored water and any manufacturing activity connected with cored wire of ferro alloys. In the absence of evidence showing that functional link, the tank could not be treated as capital goods, and the claim for duty relief failed.

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Issues: Whether the water tank was eligible as capital goods under Rule 57Q of the Central Excise Rules, 1944.

Analysis: Eligibility of an item as capital goods depends on the use to which it is put in the manufacturing process. The record showed that the tank stored water which was then softened and supplied to the cooling tower, but there was no clear showing that the stored water was used in any activity connected with the manufacture of cored wire of ferro alloys. In the absence of material establishing such functional link, the item could not be treated as capital goods.

Conclusion: The water tank was not capital goods under Rule 57Q and the claim for duty relief failed.

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