User test governs capital goods eligibility for Modvat credit; pipes and tubes used for plant cooling qualified in manufacturing.

Eligibility of pipes and tubes as capital goods for Modvat credit under Rule 57Q turns on the user test: an item qualifies if its use is integral to manufacture, and actual assimilation into the final product is not required. Applying that principle, the Court noted that the pipes and tubes carried water for cooling in the plant and were therefore used in the manufacture of the final product. It also restricted the reference to the three items specifically stated in the question and refused to expand it by reading the word "etc." broadly. No substantial question of law was found to justify a reference.

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Issues: Whether the question sought to be referred raised any substantial question of law, and whether the pipes and tubes in question were eligible as capital goods for Modvat credit under Rule 57Q of the Central Excise Rules, 1944.

Analysis: The governing principle was that the eligibility of an item as capital goods depends on the use to which it is put. The Court applied the law laid down by the Supreme Court that the user test is decisive, and that actual assimilation into the final product is not required. On the facts found by the authorities, the pipes and tubes were used for carrying water for cooling in the plant and therefore were used in the manufacture of the final product. The Court also confined the reference to the three items specifically mentioned in the question and declined to enlarge its scope by the use of the word "etc.".

Conclusion: The question did not warrant reference, and no substantial question of law arose for consideration.

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