Modvat credit on inputs used for capital goods was upheld where the Revenue failed to prove civil construction use.

Modvat credit was treated as admissible on chequered plates and welding electrodes used in manufacturing a juice sulphiter machine, because that machine qualified as capital goods employed in sugar production under Rule 57Q of the Central Excise Rules, 1944. The appellate authority's finding that the chequered plates were used in making the machine was not disputed by the Revenue, and no evidence was produced to show use in civil structure work or to exclude welding electrodes from the capital goods scope. On that basis, the order allowing credit was sustained and the Revenue's challenge failed.

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Issues: Whether Modvat credit was admissible on chequered plates and welding electrodes claimed to have been used in the manufacture of a juice sulphiter machine, so as to qualify as capital goods under Rule 57Q of the Central Excise Rules, 1944.

Analysis: The appellate authority had recorded a specific finding that the chequered plates were used in the manufacture of a juice sulphiter machine, which was itself capital goods used in the manufacture of sugar. That finding was not controverted by the Revenue. The Revenue also failed to produce any evidence to support its contention that the plates were used in civil structure work or that the welding electrodes were outside the scope of capital goods. In these circumstances, no infirmity was found in the order allowing credit.

Conclusion: Modvat credit on the chequered plates and welding electrodes was admissible and the Revenue's challenge failed.

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