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Issues: Whether MODVAT credit was admissible on seven appliances and instruments used for maintenance of plant and machinery.
Analysis: The items in question were found to be used in workshops and for maintenance work, and therefore not as part of the manufacturing process. The challenge to this factual finding failed, and the cited precedents support the view that tools or instruments used for repair or maintenance do not qualify as capital goods for availing credit.
Conclusion: MODVAT credit on the seven items was not admissible, and the denial of credit was upheld.
Ratio Decidendi: Goods used only for maintenance or repair of plant and machinery, and not in the manufacturing process itself, do not qualify as capital goods for MODVAT credit.
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