Modvat credit for air conditioning plant components upheld where the plant was integral to manufacturing and not merely peripheral use.

Components and parts of an air conditioning plant were treated as eligible for Modvat credit under Rule 57Q because the plant itself had already been accepted as eligible and its components were considered to stand on the same footing. The reasoning was that the plant was essential to completion of the manufacturing process and was integrally connected with manufacture of the final product. Revenue's contrary authority was distinguished on the basis that it involved only peripheral use, which was not the position here. The assessee therefore obtained Modvat credit on the plant components.

---

---

Issues: Whether components and parts of an air conditioning plant were eligible for Modvat credit under Rule 57Q of the Central Excise Rules, 1944.

Analysis: The eligibility of the air conditioning plant itself had been accepted, and the components forming part of that plant stood on the same footing. The reasoning proceeded on the basis that the plant was essential for completion of the manufacturing process and was integrally connected with the manufacture of the final product. The contrary authority cited by the Revenue was distinguished on the ground that it proceeded on a finding of peripheral use, which was absent here.

Conclusion: The components and parts of the air conditioning plant were eligible for Modvat credit under Rule 57Q, and the assessee succeeded.

---