Capital goods for Modvat credit include items integrally used in manufacturing machinery and plant operations under Rule 57Q.

Modvat credit was held admissible on PVC power cable, grinding wheel, pulse generator, A.O.L. housing and thyristor panel as capital goods under Rule 57Q because the items were used in manufacturing and processing machinery and had a direct nexus with the plant's functioning. They supported transmission of electricity, grinding of rolls, voltage control, DC drive operation and regulation of power supply, bringing them within the scope of capital goods for Modvat purposes. The conclusion was reinforced by the Supreme Court ratio in Jawahar Mills, and the Revenue's appeals failed.

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Issues: Whether Modvat credit was admissible on PVC power cable, grinding wheel, pulse generator, A.O.L. housing and thyristor panel as capital goods under Rule 57Q of the Central Excise Rules, 1944.

Analysis: The items were used in the manufacturing and processing machinery for transmission of electricity, grinding of rolls, voltage control, operation of the DC drive and regulation of power supply. Their use had a direct nexus with the functioning of the plant and machinery, bringing them within the scope of capital goods for Modvat purposes. The claim was also supported by the ratio of the Supreme Court decision in Jawahar Mills.

Conclusion: The credit was admissible and the Revenue's appeals failed.

Ratio Decidendi: Goods used integrally in the operation and functioning of manufacturing machinery qualify as capital goods for Modvat credit under Rule 57Q.

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