Capital goods treatment for transformer upheld where it supported manufacturing by reducing supply voltage for plant operations

Modvat credit was held admissible on a transformer treated as capital goods under Rule 57Q of the Central Excise Rules, 1944. The transformer was installed in the plant to reduce supply voltage to 433 volts for running motors used in manufacture, and it functioned as an integral part of the plant and machinery supporting the manufacturing process. On that basis, the broader explanation to Rule 57Q applied, and the order allowing credit was upheld, leaving the Revenue's challenge unsuccessful.

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Issues: Whether Modvat credit was admissible on a transformer as capital goods under Rule 57Q of the Central Excise Rules, 1944.

Analysis: The transformer was installed in the plant to reduce the supply voltage to 433 volts for running the motors used in manufacture. It functioned as an integral part of the plant and machinery and supported the manufacturing process. In these circumstances, the broader explanation to Rule 57Q justified treating the transformer as capital goods, and no infirmity was found in the order allowing credit.

Conclusion: Modvat credit on the transformer was admissible under Rule 57Q of the Central Excise Rules, 1944, and the Revenue's challenge failed.

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