Modvat credit on boiler accessories upheld where mild steel materials were permanently fixed as part of capital goods support.

Modvat credit under Rule 57Q was treated as admissible on mild steel materials used as accessories in the erection and support of a boiler. The items were found to be permanently fixed and used to keep the boiler in a stationary position, so they were regarded as forming part of the boiler accessories rather than independent consumables. The boiler was treated as capital goods eligible for credit, and the Board Circular allowing credit on parts, components and accessories used with capital goods was applied. Prior Tribunal decisions on similar accessories supported this view, and the Revenue's challenge failed.

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Issues: Whether Modvat credit under Rule 57Q was admissible on mild steel materials used as accessories in the erection and support of the boiler.

Analysis: The items were found to be permanently fixed and used for the erection of the boiler, keeping it in a stationary position, and thus forming part of the boiler accessories. The boiler was treated as capital goods eligible for Modvat credit, and the relevant Board Circular permitted credit on parts, components and accessories used with capital goods. The reasoning was supported by prior Tribunal decisions on similar items used as accessories with the main capital goods.

Conclusion: The credit was held admissible and the Revenue's appeal was rejected.

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