Pollution control filter bags used in manufacturing qualify for Modvat credit as capital goods under Rule 57Q.

Dust collector filter bags used in a cement plant were treated as part of the pollution control system and, following prior Tribunal decisions, were held eligible for Modvat credit as capital goods under Rule 57Q. The Tribunal found no contrary decision from the Revenue and accepted that such bags form an integral component of equipment used in the manufacturing process, so the disallowance on that item was set aside while the rest of the order was maintained.

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Issues: Whether dust collector filter bags used in a cement plant are eligible for Modvat credit as capital goods under Rule 57Q.

Analysis: The dispute was confined to dust collector filter bags, the other items having been accepted as chemicals and not pressed. The Tribunal noted that the assessee had specifically claimed before the lower authority that pollution control equipment and its parts form part of the cement plant machinery, and that prior Tribunal decisions had already treated dust collecting bags and filter bags as eligible for credit. No contrary decision was produced by the Revenue. In these circumstances, the Tribunal followed the settled view that such filter bags, being part of the pollution control system used in the manufacturing process, qualify for Modvat credit under Rule 57Q.

Conclusion: The dust collector filter bags were held eligible for Modvat credit and the disallowance on that item was set aside, while the remaining part of the order was maintained.

Ratio Decidendi: Pollution control equipment used in the manufacturing process, and components forming part of that system, are eligible for Modvat credit when they satisfy the requirements of Rule 57Q.

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