Modvat credit on structural items was allowed where the materials supported machinery and were not mere civil construction goods.

Modvat credit under Rule 57Q was held admissible for angles, channels, plates, rods and similar structural items used in installing and erecting machinery in a plant. The controlling distinction was whether the goods served as mere civil construction material or formed part of the machinery support system essential to effective functioning. On the facts, the items were said to make the machinery vibration-free and support its operation, and that factual claim was not rebutted. Credit was therefore allowed because the structures were closely linked with the machinery rather than used only for building construction.

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Issues: Whether Modvat credit was admissible under Rule 57Q of the erstwhile Central Excise Rules on angles, channels, plates, rods and similar structural items used for installation and erection of machinery in the plant.

Analysis: The determining factor is whether the goods are merely construction material used in civil works or whether they are structurals closely linked with the machinery and essential to its functioning. Structural items used only in building construction are not eligible for credit, but materials used as part of the machinery support system, foundations or allied structures that enable the machinery to function efficiently are covered. On the facts placed before the Commissioner, the appellants asserted that the items were used to make the machinery vibration-free and to support its effective operation, and that factual claim was not rebutted by evidence.

Conclusion: Modvat credit on the disputed structural items was admissible under Rule 57Q.

Final Conclusion: The appeal succeeded and the denial of credit was set aside.

Ratio Decidendi: Structural items are eligible for Modvat credit where they are closely associated with machinery installed in the plant and form part of the system necessary for its effective functioning, rather than being used merely as civil construction material.

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