Broad functional test for capital goods under Modvat credit allowed industrial support items used in manufacturing operations.

Rule 57Q was construed broadly on a functional approach to "plant", so items used in installation, support and functioning of machinery qualified as capital goods where they served the manufacturing set-up as tools or integral aids. On that basis, welding electrodes, GC sheets, shrinkomop-20, CTD bars, a cylindrical vertical tank, a lab hot plate and a multipurpose table top scale were treated as eligible for Modvat credit. The item expressly not pressed did not require adjudication on merits, and no substantive decision was recorded on it.

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Issues: Whether the disputed items were eligible for Modvat credit as capital goods under Rule 57Q, and whether one item, having been expressly not pressed, survived for adjudication.

Analysis: The definition of capital goods under Rule 57Q was construed broadly by applying the settled functional approach to the concept of "plant". Items used in relation to installation, support, and functioning of machinery, including welding electrodes, GC sheets, shrinkomop-20, CTD bars, cylindrical vertical tank, lab hot plate, and multipurpose table top scale, were treated as eligible because they served the assessee's industrial activity as tools or integral aids to the manufacturing set-up. The item in respect of which credit was not pressed did not require adjudication on merits.

Conclusion: Credit was allowed for seven of the eight items and denied only for Quick Drying Synthetic Enamel Chetak Blue, which was not pressed.

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