Modvat credit on factory support materials allowed where items used to support machinery fall within a liberal capital goods definition.

Cement, steel plates and bars used within the factory to support machinery may qualify as capital goods for Modvat credit under Rule 57Q where the definition is construed liberally and the items are used for producing or processing final products, or as components and accessories within the rule. The Tribunal's factual finding that the goods were used for machine support was not shown to be perverse, so the assessee was entitled to credit on those items and no substantial question of law arose for reference.

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Issues: Whether cement, steel plates and bars used for providing support to machines could qualify as capital goods for the purpose of Modvat credit under Rule 57Q of the Central Excise Rules, 1944.

Analysis: The definition of capital goods under Rule 57Q is wide and is to be given a liberal meaning. Goods used in the factory for producing or processing final products, or components and accessories used for the purposes contemplated by the rule, may qualify for credit. The Tribunal had recorded a factual finding that the cement, steel plates and bars were used to provide support to machines. That finding was not shown to be perverse. In view of the binding principle earlier laid down on the scope of capital goods, the Tribunal's view was consistent with the governing legal position.

Conclusion: The assessee was entitled to Modvat credit on the disputed items, and no substantial question of law arose for reference.

Ratio Decidendi: Items used within the factory to support machinery may fall within the wide definition of capital goods under Rule 57Q where the statutory language is construed liberally and the factual finding of use is not perverse.

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