Modvat credit on Diesel Generating Power Plant components was upheld as integral to cement manufacturing.

Modvat credit was considered admissible for parts, components and accessories of Diesel Generating Power Plant sets where the plant was found to be part and parcel of the cement factory and used in manufacturing cement. On that functional and factual basis, the relevant entry in Sl. No. 5 of the Table appended to Rule 57Q was applied, because the plant and its components formed an integral part of the manufacturing setup. The assessee was therefore entitled to credit on those items as inputs connected with the manufacture of the final product.

---

---

Issues: Whether Modvat credit was admissible on parts, components and accessories of Diesel Generating Power Plant sets as forming part of the cement factory and being used in the manufacture of the final product.

Analysis: The Court noted the finding that the Diesel Generating Power Plant sets were part and parcel of the respondent's factory and were ultimately used in the manufacture of cement. On that factual and functional basis, Sl. No. 5 of the Table appended to Rule 57Q was held applicable, since the plant and its relevant parts/components formed an integral part of the cement manufacturing setup.

Conclusion: Modvat credit on the parts, components and accessories of the Diesel Generating Power Plant sets was held to be admissible in favour of the assessee.

---