MODVAT credit for structural support items used with plant and machinery was held admissible despite not being expressly listed as capital goods.

MODVAT credit under Rule 57Q could not be denied merely because iron and steel products and other items used as structural support for plant and machinery were not expressly listed as capital goods. Applying the user test, the items were treated as forming part of the machinery when used in the manufacture process and for erection or support of plant and machinery, and the Tribunal had correctly examined them item by item as eligible capital goods or components/parts. Credit was therefore admissible, and the question of law was answered in favour of the assessee.

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Issues: Whether MODVAT credit under Rule 57Q of the Central Excise Rules, 1944 could be denied in respect of iron and steel products and other items used as structural support to plant and machinery on the ground that they were not specified as capital goods.

Analysis: The goods in question were used in the manufacture process and for erection or support of plant and machinery. The Tribunal had examined the items individually and treated them as capital goods or components/parts eligible for credit. Applying the user test, and following the principle that items used as structural support for machinery may form part of the machinery for credit purposes, credit could not be denied merely because the goods were not expressly listed as capital goods under the relevant rule.

Conclusion: The credit was held admissible and the question of law was answered in favour of the assessee.

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