Modvat credit for electrical goods used in power supply to manufacturing machinery upheld under Rule 57Q.

Modvat credit was allowed on a rotating machine treated as capital goods because electrical goods used to supply electricity to a manufacturing plant and machinery qualify under Rule 57Q. The tribunal followed its Larger Bench precedent, as approved by the Supreme Court, and applied that principle to the machine's use in electricity supply. On that basis, the Revenue's appeal was rejected.

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Issues: Whether rotating machine used for supplying electricity to the manufacturing plant and machinery qualified as capital goods eligible for Modvat credit under Rule 57Q.

Analysis: The issue was held to be covered in favour of the assessee by binding precedent, which treated electrical goods used for supply of electricity to the manufacturing plant and machinery as capital goods eligible for Modvat credit under Rule 57Q. The rotating machine in question was admittedly used for that purpose.

Conclusion: The rotating machine was eligible for capital goods credit under Rule 57Q, and the Revenue's challenge failed.

Final Conclusion: The appeal was rejected and the allowance of Modvat credit on the rotating machine was upheld.

Ratio Decidendi: Electrical goods used for supplying electricity to the manufacturing plant and machinery qualify as capital goods for Modvat credit under Rule 57Q.

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