Manufacturing use of moulds governs depreciation rate, not final product description, for plastic component production.

Moulds used by an electrical and electronic goods manufacturer were treated as eligible for 40% depreciation where they were functionally used in processing plastic granules into plastic components for assembly into the final products. The relevant test was the use of the moulds in the manufacturing process, not merely the nature of the finished goods. On that basis, moulds used in such production activity could qualify as moulds used in rubber and plastic goods factories under Appendix I to Rule 5 of the Income-tax Rules, 1962, and the Revenue's objection to the higher depreciation rate failed.

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Issues: Whether moulds used in the manufacture of switches and sockets by an electrical and electronic goods manufacturer were entitled to depreciation at 40% as moulds used in rubber and plastic goods factories under Appendix I to Rule 5 of the Income-tax Rules, 1962.

Analysis: The assessee's case was that the moulds were used in processing plastic granules into plastic components which were assembled into the final products, so the moulds were functionally used for manufacturing plastic goods. The Revenue relied on the nature of the final products and contended that electrical and electronic items could not be treated as rubber and plastic goods factories. The earlier order in the assessee's own case and the tribunal decisions relied upon supported the view that the relevant test is the use of the moulds in the manufacturing process and not merely the character of the ultimate finished product.

Conclusion: The moulds were held eligible for depreciation at 40%, and the Revenue's objection to the higher rate failed.

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