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of <h1>Revenue appeals dismissed; Crane, Loader, rebar, CTD bars, TOR steel and cement held capital goods under Rule 57Q</h1> The HC dismissed the Revenue's appeals, upholding the Tribunal's finding that the Crane with accessories and Loader qualify as capital goods under Rule ... Modvat credit - Capital goods under Rule 57Q - Entitlement of the assessee for Modvat credit on the Crane, Loader with accessories, Cement, Bulldozer - Whether the Tribunal is correct in holding that structural steel items, viz., Rebar Coils, CTD Bars, TOR Steel and Cement used for civil construction activity, being in the nature of building materials are capital goods eligible for credit in terms of Rule 57Q as it stood at the relevant time. HELD THAT:- As far as the Crane with accessories and Loader are concerned, there cannot be any difficulty in holding that they will come within the items of machinery or equipment used for production or processing of any goods for the manufacture of final products. As has been held by the Apex Court in Jawahar Mills Limited's case [2001 (7) TMI 118 - SUPREME COURT], the Rule makes it explicitly clear that the order of the Tribunal in dismissing the appeal preferred by the Revenue in respect of these two items and remitting the matter for fresh consideration in regard of the Bulldozer requires no consideration. As far as the other items, namely, Rebar Coils, CTD Bars, TOR Steel and Cement are concerned, as to whether they are capital goods or not, the Tribunal having regard to the law laid down by the Apex Court in Jawahar Mill's case, has liberally construed the above Rule and factually found that these are the items, which are used for the purpose of construction of the plant comprising of concrete foundations, concrete silos for storing raw materials, clinker and cement, pre-heater tower structure, load centers etc. Thus, the Tribunal had found that these items are not used for civil construction, but for the construction, which are absolutely necessary for establishing a manufacturing unit for cement. The question as to how Rule 57Q should be interpreted came up recently before the Apex Court in Commissioner of Central Excise, Jaipur v. Rajasthan Spinning & Weaving Mills Ltd. [2010 (7) TMI 12 - SUPREME COURT]. In paragraphs 12 and 13, while applying the 'user test' and following the Jawahar Mills's case, the Apex court has held that even though steel plates and M.S. Channels used in the fabrication of chimney would fall within the ambit of 'capital goods'. The aforesaid judgment makes it clear that the Court should apply liberal test to find out as to whether a particular item would fall under the definition of 'capital goods' or not. Thus, the above items are used for civil construction, we are of the considered view that the order of the Tribunal requires no interference. Accordingly, these appeals are dismissed and the question of law raised in the appeals is answered against the Revenue. Issues:1. Whether the Loader, Crane with accessories, Cement, Bulldozer fall under the definition of Capital Goods under Section 57Q for Modvat creditRs.2. Whether Rebar Coils, CTD Bars, and TOR Steel are capital goods under Rule 57QRs.Analysis:1. The first issue revolves around the classification of certain items as capital goods under Section 57Q for Modvat credit. The Tribunal upheld the entitlement of the assessee for Modvat credit on the Crane and Loader, considering them as machinery or equipment used for production. The Apex Court's decision in Jawahar Mills Limited's case was cited to support this classification. However, the matter regarding the Bulldozer was remanded for further consideration. As for the Rebar Coils, CTD Bars, TOR Steel, and Cement, the Tribunal, in line with the liberal interpretation of Rule 57Q from the Jawahar Mills case, deemed these items essential for establishing a manufacturing unit for cement, not merely for civil construction work.2. The second issue pertains to the interpretation of Rule 57Q and whether the items like Rebar Coils, CTD Bars, and TOR Steel qualify as capital goods. The Tribunal's decision was influenced by the Apex Court's ruling in Commissioner of Central Excise, Jaipur v. Rajasthan Spinning & Weaving Mills Ltd., emphasizing the 'user test' and liberal construction of the term 'capital goods.' The Tribunal's factual findings supported the view that the mentioned items were crucial for setting up a manufacturing unit for cement, warranting their classification as capital goods under Rule 57Q.3. The judgment highlights the importance of applying a liberal approach in interpreting Rule 57Q to determine the eligibility of items as capital goods. The Court endorsed the Tribunal's factual findings regarding the essential nature of the items in question for establishing a manufacturing unit, aligning with the principles laid down in previous legal precedents. Ultimately, the appeals were dismissed, and the question of law raised was decided against the Revenue, emphasizing the need for a broad interpretation of the term 'capital goods' in such cases.
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