Capital goods credit extended to conductors, impellers and bulldozers used within the factory

Credit was admissible on copper and aluminium conductors, impellers and a bulldozer as capital goods under the relevant explanation to Rule 57Q of the Central Excise Rules. The items were stated to be integrally connected with the manufacturing process and used within the factory, and that explanation was not controverted by the Revenue. On the then-applicable definition of capital goods, conductors were covered, impellers were treated as part of machinery within the rule, and bulldozers were accepted as raw material handling equipment. Accordingly, modvat credit on all three items was available.

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Issues: Whether credit was admissible on copper/aluminium conductors, impeller and bulldozer as capital goods under the relevant explanation to Rule 57Q of the Central Excise Rules.

Analysis: The use of all three items in the factory was explained as being integrally connected with the manufacturing process. The Revenue did not controvert or rebut that explanation and did not dispute that the items were used within the factory. On the definition of capital goods as it stood during the relevant period, copper/aluminium conductors were covered, impellers were treated as part of machinery falling within the explanation to the rule, and bulldozers were held admissible as raw material handling equipment.

Conclusion: Credit on all three items was admissible as capital goods, and the Revenue's challenge failed.

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