Capital goods eligibility for plant structures turns on functional use in manufacturing, not tariff classification.

Ducts and steel structurals used in a cement plant as integral parts of the plant and machinery were treated as capital goods for Modvat credit under Rule 57Q of the erstwhile Central Excise Rules, 1944. Their eligibility depended on functional use in the manufacturing system, not on whether they were independent structures or on their classification under a nil-rated heading. The analysis followed the Supreme Court ratio in Jawahar Mills and supporting Tribunal precedent recognising structurals and support items as capital goods when they have a direct manufacturing nexus. Modvat credit was therefore admissible.

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Issues: Whether ducts and steel structurals used in the cement plant as part of the plant and machinery for manufacture of cement were eligible to be treated as capital goods for the purpose of Modvat credit under Rule 57Q of the erstwhile Central Excise Rules, 1944.

Analysis: The items were used in the manufacture process as integral components of the plant and machinery and not as mere independent steel structures. The Commissioner had correctly applied the ratio of the Supreme Court in Jawahar Mills and the view was supported by Tribunal decisions recognizing structural and support items, when functionally used in the manufacturing system, as eligible capital goods. The Revenue's objection that the items were classifiable under a nil-rated heading did not dislodge their functional nexus with the manufacturing plant.

Conclusion: The ducts and structurals were rightly held to be capital goods and Modvat credit was admissible.

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