Modvat credit under Rule 57Q does not extend to computers used only for CAD designing and drawing.

Computers used only for CAD-based designing and drawing of transformers were held not to qualify as capital goods for Modvat credit under Rule 57Q. The provision was treated as confined to machines, machinery, plant, equipment, apparatus, tools or appliances directly used for producing or processing goods, or for bringing about a change in a substance used in manufacture. Because CAD work assisted design and planning but did not itself produce or process excisable goods, nor effect any change in raw materials, the broader "used in or in relation to manufacture" approach was rejected. The credit claim was therefore denied.

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Issues: Whether computers used for CAD-based designing and drawing of transformers qualified as capital goods for Modvat credit under Rule 57Q.

Analysis: Rule 57Q allowed credit only in respect of machines, machinery, plant, equipment, apparatus, tools or appliances used for producing or processing goods or for bringing about a change in a substance for the manufacture of final products. The use of computers for CAD work assisted design and planning, but such use did not amount to producing or processing excisable goods, nor did it bring about a change in raw materials or substances used in manufacture. The definition under Rule 57Q was narrower than the broader "used in or in relation to manufacture" language found in other Modvat provisions, and it could not be enlarged to cover computers used only for designing.

Conclusion: Computers used for CAD designing were not eligible capital goods for Modvat credit under Rule 57Q, and the claim was rejected.

Final Conclusion: The appeal failed because the disputed computers did not fall within the restricted scope of capital goods under Rule 57Q for Modvat purposes.

Ratio Decidendi: For Modvat credit under Rule 57Q, eligibility is confined to equipment directly used for producing or processing goods or for effecting a change in substances for manufacture, and it does not extend to computers used merely for design and drawing.

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