Capital goods credit for furnace insulation blocks upheld by applying the same principle used for refractory bricks.

Blocks or thermal insulation blocks used inside a furnace were treated as eligible capital goods for credit under Rule 57Q because the Tribunal applied its earlier view that refractory bricks used to repair or construct a furnace fall within the Explanation to the rule. It reasoned that internal furnace insulation material stood on the same footing as refractory material, and noted that a later amendment expressly including refractory materials supported the pre-amendment interpretation. On that basis, the blocks qualified for capital goods credit and the appeal was dismissed.

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Issues: Whether blocks or thermal insulation blocks used for inside insulation of a furnace qualify as capital goods for the purpose of credit under Rule 57Q of the Central Excise Rules.

Analysis: The Tribunal followed its earlier view that refractory bricks used for repairing and constructing a furnace are eligible for capital goods credit under the Explanation to Rule 57Q. It treated the insulation material used inside the furnace as falling within the same principle, and noted that refractory materials were later specifically included by amendment, which reinforced the pre-amendment position.

Conclusion: The blocks or thermal insulation blocks were held eligible for capital goods credit, and the appeal was dismissed.

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