Capital goods credit under Rule 57Q upheld for cryogenic and sulphuric acid tanks under the Jawahar Mills principle.

Cryogenic tanks and sulphuric acid tanks were treated as capital goods eligible for credit under Rule 57Q because the governing test, as explained in Jawahar Mills, did not require a direct nexus with the final product. The broader observation in Surya Roshni was regarded as obiter and not the ratio of the larger Bench decision. Applying the Jawahar Mills principle, the goods fell within the scope of capital goods and credit was allowed in favour of the assessee.

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Issues: Whether the cryogenic tank and the sulphuric acid tanks qualified as capital goods eligible for credit under Rule 57Q.

Analysis: The eligibility turned on the construction of Rule 57Q and the effect of the larger Bench ruling in Jawahar Mills, which held that an item need not have a direct nexus with the final product to qualify as capital goods. The later discussion in Surya Roshni was treated as obiter because the larger Bench was constituted to resolve the conflict on the correctness of Jawahar Mills, and the perceived broader observation did not constitute the ratio of that decision. Applying the Jawahar Mills ratio, the goods in question were held to fall within the scope of capital goods.

Conclusion: The items were eligible for credit under Rule 57Q, in favour of the assessee.

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