Modvat credit on inputs for plant support structures upheld despite earth-embedded installation and capital goods treatment.

Modvat credit was held admissible on duty-paid inputs used to fabricate supporting structures for industrial equipment, including a blast furnace and material handling system. The structures were treated as capital goods because they served an operational function in the plant and were not merely civil construction. Embedding the structures to the earth was not a valid reason to deny credit. It was further noted that Rule 57Q did not require the capital goods themselves to be dutiable for credit on parts used in their fabrication, and the cited authorities supported credit on such supporting structures.

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Issues: Whether Modvat credit was admissible on duty-paid inputs such as HR sheets, angles, channels, joists and rounds used in the fabrication and erection of supporting structures for blast furnace and material handling equipment, notwithstanding that the structures were embedded to the earth.

Analysis: The inputs were used in the fabrication of supporting structures for industrial equipment and not for civil construction. The structures supported the blast furnace and raw material handling system and were treated as capital goods for the purpose of credit. Embedding the structures to the earth was held not to be a valid ground to deny credit. It was further held that Rule 57Q did not require the capital goods themselves to be dutiable for credit on parts used in their fabrication, and the cited decisions supported admissibility of credit on such supporting structures.

Conclusion: Modvat credit was admissible on the inputs used for the supporting structures, and denial of credit was unsustainable.

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