Integral manufacturing equipment can qualify as capital goods, and a binding clarification may make alternative appellate remedy ineffective.

Goods integral to the kraft paper manufacturing chain, including a renewable energy device, boilers, boiler components and materials for erection, were treated as capital goods because Section 2(11) of the Tamil Nadu Value Added Tax Act covers plant, machinery, equipment and their components, accessories and spare parts used in manufacture or processing. On that basis, input tax credit under Section 19(3) was held available. The availability of an appellate remedy did not bar writ jurisdiction where a Commissioner's clarification on the same issue would make an appeal to the same authority an empty formality, so the writ petitions were maintainable and the rejection of credit was set aside.

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Issues: (i) Whether renewable energy device, boilers, boiler components and materials for erection of boilers used in the manufacturing chain of kraft paper constitute "capital goods" so as to qualify for input tax credit; (ii) whether the writ petitions were maintainable despite the availability of an appellate remedy.

Issue (i): Whether renewable energy device, boilers, boiler components and materials for erection of boilers used in the manufacturing chain of kraft paper constitute "capital goods" so as to qualify for input tax credit.

Analysis: The statutory definition of "capital goods" under Section 2(11) of the Tamil Nadu Value Added Tax Act, 2006 covers plant, machinery, equipment, apparatus, tools, appliances, electrical installations, and also components, spare parts and accessories used for manufacture, processing, packing or storing of goods in the course of business. The materials placed before the Court showed that kraft paper manufacturing involved multiple stages and that the disputed equipment formed part of the integrated manufacturing process. Goods which are integral to the manufacturing process and function as apparatus, accessories or components cannot be excluded merely because they do not directly produce the final product.

Conclusion: The disputed goods are capital goods and the assessee is entitled to input tax credit under Section 19(3) of the Act.

Issue (ii): Whether the writ petitions were maintainable despite the availability of an appellate remedy.

Analysis: A clarification issued by the Commissioner on the very same issue would bind subordinate officers, and an appeal before the same authority would therefore be an empty formality. In such a situation, the alternative remedy does not operate as an effective bar to the exercise of writ jurisdiction.

Conclusion: The writ petitions were maintainable.

Final Conclusion: The assessment orders rejecting input tax credit on the disputed goods were unsustainable and were set aside, with the writ petitions allowed.

Ratio Decidendi: Goods forming an integral part of the manufacturing process, including apparatus, components and accessories used in producing the final product, fall within "capital goods" for the purpose of input tax credit; an alternative remedy is not an effective bar where a binding clarification makes the appellate remedy illusory.

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