Modvat credit on factory air-conditioning units allowed where equipment served the control room and qualified as capital goods.

Air-conditioning units installed in a factory control room were treated as capital goods for Modvat credit under Rule 57Q of the Central Excise Rules, 1944, because they were used within the factory and not shown to be for an office or other non-factory purpose. Credit could not be denied merely on the basis that the equipment regulated the control room temperature. The earlier restrictive view on such equipment was not applied in light of the later larger Bench position, and Modvat credit was therefore admissible.

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Issues: Whether Modvat credit was admissible on air-conditioning units installed in the factory control room under Rule 57Q of the Central Excise Rules, 1944.

Analysis: Air-conditioning units used in the factory were held to fall within the category of capital goods for the purpose of Rule 57Q. The allowance of credit could not be denied merely because the equipment regulated the temperature of the control room, since the record did not show that the units were used in an office or for any non-factory purpose. The earlier view disallowing credit on such equipment was not applied in light of the later larger bench position.

Conclusion: Modvat credit on the air-conditioning units was admissible and the Revenue's challenge failed.

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