Modvat credit for gas scrubbers and packed bed upheld as capital goods accessories used with D.G. sets

Gas scrubbers and spare packed bed used with D.G. sets were examined for Modvat credit eligibility under Rule 57Q. The note analyses whether the items were only chemical media falling under Chapter 38 or whether they qualified under Heading 84.21, or as components, spares or accessories of listed capital goods used in the factory. On the stated facts, the items were treated as functioning with the D.G. sets and as connected accessories or components within the amended definition of capital goods. The result recorded is that Modvat credit was available, and the Revenue's objection failed.

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Issues: Whether gas scrubbers and spare packed bed for scrubber, used along with D.G. sets, were eligible for Modvat credit as capital goods under Rule 57Q of the Central Excise Rules, 1944.

Analysis: The dispute centered on whether the goods were merely chemical media falling under Chapter 38 or whether they qualified as goods covered by Heading 84.21 and, alternatively, as components, spares or accessories of capital goods used in the factory. The relevant definition of capital goods under Rule 57Q included specified headings and, by later amendment, components, spares and accessories of the listed goods. The adjudicating finding recorded that the items functioned as chemical media for separation of sulphur impurities from intake air and were installed in D.G. sets. On that basis, the items were treated as falling within the eligible category as accessories or components connected with capital goods.

Conclusion: The items were held eligible for Modvat credit as capital goods, and the Revenue's challenge failed.

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