Modvat credit on heat pump compressor upheld where exclusion for refrigerating and air-conditioning machinery was not proved.

Modvat credit under Rule 57Q was admissible for a heat pump/compressor installed to maintain temperature because the exclusion for compressors used in refrigerating and air-conditioning appliances was not shown to cover the particular equipment. The record treated the item as a heat pump, and no material established that it answered the specifically excluded description. The exclusion was therefore not applied on a blanket basis to all compressors, and the credit claim succeeded against the Revenue challenge.

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Issues: Whether Modvat credit under Rule 57Q was admissible on the heat pump/compressor installed for maintaining temperature, or whether it fell within the excluded category of compressors used in refrigerating and air-conditioning appliances and machinery.

Analysis: The dispute turned on the scope of the exclusion attached to capital goods credit. The claimed item was treated as a heat pump and the record did not show that it was of the type of compressor specifically excluded from the credit scheme. The exclusion was not demonstrated to cover all compressors indiscriminately, and no material was produced to show that the particular equipment answered the excluded description.

Conclusion: The credit was admissible and the Revenue challenge failed.

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