Broad Rule 57Q interpretation allows Modvat credit for equipment used in manufacturing, including chilled water coil and weighing machine.

Rule 57Q was construed broadly to cover machines, equipment, plant, tools, apparatus and their components or accessories used in producing or processing goods, even where they do not directly effect the change in the goods. On that enlarged reading, chilled water coil and a weighing machine were treated as capital goods for Modvat purposes, and the denial of Modvat credit was not sustained in favour of the assessee.

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Issues: Whether chilled water coil and weighing machine qualified as capital goods for the purpose of Modvat credit under Rule 57Q.

Analysis: The Explanation to Rule 57Q was read broadly to cover machines, machinery, plant, equipment, apparatus, tools or appliances used for producing or processing goods, as well as components, spare parts and accessories of such equipment used for the same purpose. The provision was treated as wide enough to include items used in the manufacturing process even if they do not directly bring about the change in the goods, and the items in question were found to fall within that enlarged meaning.

Conclusion: The items were held to be covered by the definition of capital goods and the denial of Modvat credit was not sustained, in favour of the assessee.

Ratio Decidendi: Rule 57Q is to be construed broadly so as to include machinery, equipment and their components or accessories used for producing or processing goods or for manufacturing the final product.

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