Capital goods credit for machinery used in making sand moulds and cores upheld as an intermediate step in casting

Credit under Rule 57R was held admissible for machinery used to make sand moulds and sand cores where those items formed an inevitable intermediate step in producing metal castings. The analysis treated the moulds and cores as intermediate products with no independent commercial function apart from their use in the casting process. On that basis, the restriction in Rule 57R(1) for capital goods used exclusively in making exempted goods was not applied to deny credit, and the machinery was treated as capital goods within the Rule 57Q and Rule 57R scheme. The disallowance of credit was therefore not sustainable.

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Issues: Whether credit under Rule 57R was admissible on machinery used to make sand moulds and sand cores, when those moulds and cores were used in the manufacture of metal castings.

Analysis: The machinery was used in making sand moulds and sand cores that served as an inevitable intermediate step in the manufacture of the final castings. On the reasoning adopted from prior Tribunal authority, sand moulds and sand cores were treated as intermediate products having no independent commercial function apart from their role in casting. In that view, the bar in Rule 57R(1) for capital goods used exclusively in making exempted goods did not govern the case in the manner applied by the lower authorities, and the machinery used for producing the intermediate moulds was eligible to be treated as capital goods under the scheme of Rule 57Q and Rule 57R.

Conclusion: Credit was admissible and the disallowance was not sustainable.

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