Actual use governs Modvat credit eligibility; items used for civil construction do not qualify as capital goods.

Entitlement to Modvat credit under Rule 57-Q turned on the actual use of the goods in the factory, not the tariff classification shown in the supplier's invoice. Plates, sections, columns, staging material and similar items used to raise civil structures, including platforms and supporting arrangements for machinery and equipment, were treated as civil construction inputs and therefore did not qualify as capital goods. Decisions cited for the assessee were distinguished on their facts because they involved different uses and, in some instances, technological structures rather than civil construction. The disallowance of Modvat credit was upheld and the assessee's claim failed.

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Issues: Whether the respondents were entitled to Modvat credit on plates, sections, columns, staging material and similar items as capital goods under Rule 57-Q.

Analysis: The entitlement to credit depended on the actual use of the goods in the factory and not merely on the classification shown in the suppliers' invoices. The items were found to have been used for raising civil structures, including platforms and supporting arrangements for machinery and equipment. On that factual use, they did not qualify as capital goods under Rule 57-Q. The decisions cited on behalf of the respondents were distinguished on facts because they concerned different kinds of use and, in some instances, technological structures rather than civil construction.

Conclusion: The respondents were not entitled to Modvat credit on the disputed items, and the issue is decided against the assessee.

Final Conclusion: The disallowance of Modvat credit was upheld and the Revenue's appeal succeeded.

Ratio Decidendi: For eligibility as capital goods under Rule 57-Q, the decisive factor is the actual use of the goods in the factory, and items used for civil construction or for raising supporting structures do not qualify merely because they are described under a particular tariff chapter in the invoice.

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