Modvat credit on mining equipment denied where a contiguous mine could not be treated as part of the factory.

Modvat credit under Rule 57Q was denied on an excavator used in mining operations because a mine governed by the Mines Act cannot be treated as part of the factory merely due to contiguity with factory premises. The equipment therefore did not satisfy the requirement of use within the factory, and credit was inadmissible.

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Issues: Whether Modvat credit under Rule 57Q was admissible on an excavator used in mining operations on the footing that the mine formed part of the factory.

Analysis: The excavator was used in mines situated contiguously to the factory, but the claim depended on treating the mine as part of the factory for the purposes of Rule 57Q. The reasoning rejected that premise, holding that a mine governed by the Mines Act cannot be treated as part of the factory under the factory law definition relied upon for Modvat eligibility. On that basis, the excavator used in the mine did not satisfy the requirement of use within the factory.

Conclusion: Modvat credit on the excavator was not admissible and the claim failed.

Ratio Decidendi: For Modvat eligibility under Rule 57Q, equipment used in a mine cannot be treated as used within the factory merely because the mine is contiguous to the factory premises.

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