Modvat credit on plant items used in cement manufacture extends to parts, spares, tools and pollution-control devices.

Specified items used in cement manufacture were treated as eligible Modvat credit capital goods under Rule 57Q because their function brought them within the rule's scope. Refractory materials, fire bricks and linings were regarded as essential to kiln operations, while hammer parts, conveyor belts, fibre bulk, mechanical spares, electrical machinery and spares, instruments, tools, and oil compression ring and gear-related parts were accepted as parts, accessories, spares or equipment used in the plant and machinery. Dust collecting and filter bags were also treated as pollution-control devices forming part of the manufacturing process. The disallowance was therefore set aside to that extent.

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Issues: Whether the specified items used in cement manufacture were eligible for Modvat credit as capital goods under Rule 57Q of the Central Excise Rules, 1944.

Analysis: The items were examined category-wise by reference to their function in the cement plant. Refractory materials, fire bricks and linings were treated as essential to kiln operations. Hammer parts, conveyor belts, fibre bulk, mechanical spares, electrical machinery and spares, instruments, tools and oil compression ring and gear-related parts were found to be parts, accessories, spares or equipment used in the plant and machinery, or otherwise within the explanation to Rule 57Q. Dust collecting and filter bags were treated as pollution-control devices forming part of the manufacturing process. The reasoning applied the settled principle that Modvat credit is available not only to machinery that directly brings about change in the material, but also to eligible parts, accessories, appliances, tools and devices used in manufacture.

Conclusion: The specified items were held eligible for Modvat credit as capital goods under Rule 57Q, and the disallowance was set aside to that extent.

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