Capital goods treatment for repair materials: iron and steel items used to maintain machinery qualified for Modvat credit.

Iron and steel bars, channels, angles, shapes, sections, M.S. rods, H.R. iron plates, M.S. joist structure, jointing sheets and packing sheets used for repairing and maintaining plant and machinery in a sugar mill were treated as capital goods under Rule 57Q. The Tribunal followed earlier decisions holding that plates, bars and rods used as replacement materials for damaged machinery parts can qualify where they are used in repair of plant, storage tanks, boilers or kiln shells. On the admitted facts, the items were on the same footing, so Modvat credit was admissible.

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Issues: Whether iron and steel bars, channels, angles, shapes, sections, M.S. rods, H.R. iron plates, M.S. joist structure, jointing sheets and packing sheets used for repairing parts of plant and machinery in a sugar mill qualified as capital goods for Modvat credit under Rule 57Q.

Analysis: The items were used for repair and maintenance of plant and machinery and the lower authority had accepted that factual position, though it denied credit on the view that the items did not fall within the Explanation to Rule 57Q. The Tribunal relied on earlier decisions holding that plates, bars and rods used for repairing damaged machinery parts, storage tanks, boilers and kiln shells are eligible capital goods where they are used as replacements of damaged parts of machinery. On the facts, the present items stood on the same footing as the materials considered in those decisions.

Conclusion: The items were eligible capital goods under Rule 57Q and Modvat credit was admissible; the assessee succeeded.

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