Capital goods under Rule 57Q include processing machinery used in manufacture, enabling Modvat credit for the freezer drier machine.

A computer-controlled freezer drier machine with chilling cabinet used to process herbs and other raw materials for manufacturing Ayurvedic medicines fell within the scope of capital goods under Rule 57Q because the machine was used in processing goods and bringing about change in substances for manufacture of final products. Its use for manufacture was not disputed, and that use satisfied the provision's plain language and the broader test of goods used in or in relation to manufacture. The machine therefore qualified for Modvat credit.

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Issues: Whether a computer controlled freezer drier machine with chilling cabinet used for processing herbs and raw materials in the manufacture of Ayurvedic medicines qualified as capital goods so as to entitle the assessee to Modvat credit under Rule 57Q.

Analysis: The machine was found to be used in the processing of herbs and other raw materials for manufacture of the final products, and that use was not disputed by the department. Rule 57Q, Explanation clause (a), covers machines, machinery, plant, equipment, apparatus, tools or appliances used for producing or processing goods or for bringing about any change in substances for manufacture of final products. The machine therefore fell within the plain scope of the provision. The reasoning was also supported by the principle that goods used in or in relation to manufacture satisfy the test of capital goods for Modvat credit.

Conclusion: The machine was capital goods within Rule 57Q and the assessee was entitled to Modvat credit.

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