Capital goods exclusion for air-conditioners bars Modvat credit under Rule 57Q after the 1997 notification.

Air-conditioners classifiable under sub-heading 8415.00 were excluded from the definition of capital goods for Modvat credit under Rule 57Q of the Central Excise Rules, 1944, as applicable during the relevant period. The exclusion covered refrigerating and air-conditioning appliances and machinery, so credit on such goods used in the factory of the manufacturer was not available. Authorities were therefore correct in denying Modvat credit. Earlier decisions cited by the appellant arose in a different statutory context and, after Notification No. 6/97-C.E. (N.T.), did not govern the present position.

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Issues: Whether air-conditioners falling under sub-heading 8415.00 were eligible as capital goods for Modvat credit under Rule 57Q of the Central Excise Rules, 1944 in view of Notification No. 6/97-C.E. (N.T.) dated 1-3-1997.

Analysis: Rule 57Q, as applicable during the relevant period, specifically excluded refrigerating and air-conditioning appliances and machinery falling under sub-heading 8415.00 from the ambit of capital goods eligible for credit in the factory of the manufacturer. The earlier authorities therefore correctly denied credit on the air-conditioners. The decisions relied upon by the appellant were rendered in a different statutory setting, before the amendment brought about by Notification No. 6/97-C.E. (N.T.), and were not applicable to the facts of this case.

Conclusion: The air-conditioners were not eligible capital goods and the denial of Modvat credit was correct.

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