Modvat credit on foundation materials for factory day bins cannot be denied merely because they became immovable property.

Modvat credit under Rule 57Q was considered available on hot rolled steel plates used to construct the foundation for day bins installed in the factory. The Tribunal applied its earlier view that credit cannot be denied merely because the capital goods, in use, became permanently attached to the earth or to something attached to the earth. On that reasoning, the foundation work for the day bins did not exclude the goods from the Rule 57Q scheme as capital goods used in the factory, and denial of credit on the ground that the goods formed part of immovable property was rejected.

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Issues: Whether Modvat credit under Rule 57Q was admissible on hot rolled steel plates used in constructing the foundation for day bins installed in the factory, when the goods were said to have become part of immovable property.

Analysis: The dispute turned on whether the mere fact that the capital goods, in the course of their use, became permanently attached to the earth or to something attached to the earth was sufficient to deny credit. The Tribunal applied its earlier view that credit cannot be denied solely on that ground where the rule otherwise covers the goods as capital goods used in the factory. The reasoning was held applicable to the present facts concerning the foundation for the day bins.

Conclusion: Modvat credit was admissible and the denial on the ground of immovable property was rejected.

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