Modvat credit for screw conveyor used with pollution control equipment was upheld as capital goods under Chapter 84.

Screw conveyor used with electrostatic precipitator in a pollution control system was treated as capital goods for Modvat credit under Rule 57Q. Because the item removed dust and cement particles in the factory and fell under Chapter 84, including Heading 84.21, it satisfied the rule for capital goods used in manufacture. On that basis, credit on the item was held admissible where the conveyor operated in connection with eligible pollution control equipment.

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Issues: Whether the screw conveyor used with pollution control equipment was eligible for Modvat credit as capital goods under Rule 57Q of the Central Excise Rules, 1944.

Analysis: The item was used with the electro static precipitator to remove dust and cement particles collected in the pollution control system and was not disputed as having such use. It was classified under Heading 84.21, and goods falling under Chapter 84, including Heading 84.21, were treated as capital goods under the relevant rule when used in the factory of manufacture. Since the screw conveyor functioned in connection with pollution control equipment entitled to capital goods credit, the denial of credit was not sustainable.

Conclusion: The screw conveyor was eligible for Modvat credit as capital goods.

Final Conclusion: The appeal succeeded and the assessee obtained credit on the disputed item.

Ratio Decidendi: Goods falling under Chapter 84, including Heading 84.21, qualify as capital goods under Rule 57Q when used in the factory of manufacture, including where they are used in connection with eligible pollution control equipment.

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