Capital goods test under Modvat credit focuses on manufacturing use of materials integral to production processes.

H.R. plates and coils used in constructing conveyor galleries were examined under Rule 57-Q of the Central Excise Rules, 1944 for Modvat credit as capital goods. The governing test was whether the items were used in the factory for producing or processing goods, or for bringing about a change in any substance for manufacture of the final product. Concurrent factual findings treated the plates and coils as components of the conveyor gallery platform integral to manufacturing, so the dispute was resolved on that factual basis and no substantial question of law arose.

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Issues: Whether H.R. plates and coils used in construction of conveyor galleries qualified as capital goods under Rule 57-Q of the Central Excise Rules, 1944 for the purpose of Modvat credit.

Analysis: The applicable test was whether the goods were used in the factory for producing or processing goods or in bringing about a change in any substance for manufacture of the final product. The Court noted that the Commissioner had recorded a factual finding that the H.R. plates and coils were used as components for the platform of the conveyor gallery and were integral to the manufacturing process. That finding was affirmed by the Tribunal. In light of the governing principle, the question turned on the specific manufacturing use of the goods, and the concurrent factual finding showed that the goods were used for producing the final product.

Conclusion: The assessee was not entitled to raise a substantial question of law, and the Revenue's challenge failed.

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