User test for capital goods supports Modvat credit on M.S. flats, plates and angles used in plant fabrication.

M.S. flats, plates and angles used in fabrication and replacement work for an electrolytic cell were treated as capital goods for Modvat credit under Rule 57Q because they were employed in the manufacturing process and satisfied the user test applied to plant components. The court followed the assessee's earlier decision and the Supreme Court's approach that steel materials used to fabricate parts of manufacturing plant can fall within the scope of capital goods. In the absence of any distinguishing circumstance, the same view was applied and the Revenue's challenge failed.

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Issues: Whether M.S. flats, plates and angles used in the manufacture of aluminium products were eligible for Modvat credit as capital goods under Rule 57Q of the Central Excise Rules, 1944.

Analysis: The goods were used in the assessee's manufacturing process for replacement and fabrication work in the electrolytic cell. The question was already covered by the assessee's own earlier decision and by the Supreme Court's application of the user test, under which steel plates and similar materials used in fabrication of plant components fall within the ambit of capital goods. In the absence of any new distinguishing circumstance, the same view was followed.

Conclusion: The items were held eligible for Modvat credit under Rule 57Q of the Central Excise Rules, 1944, and the Revenue's challenge was rejected.

Ratio Decidendi: Materials such as M.S. flats, plates and angles used in the fabrication or replacement of parts of manufacturing plant can qualify as capital goods where the user test is satisfied.

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