Capital goods under Modvat law include power transmission cables essential to running manufacturing machinery and credit is admissible.

Insulated copper cables and wires used to transmit power within the factory were treated as capital goods under Rule 57Q because the definition is broad and extends beyond main production machinery to components, spares and accessories essential for the plant's effective running. The cables were necessary to supply power for operating manufacturing machinery and were therefore an integral part of the plant and machinery used in manufacture. On that basis, Modvat credit was held admissible on the cables and wires, and the denial of credit was set aside.

---

---

Issues: Whether insulated copper cables and wires used for transmission of power in the appellants' factory qualify as capital goods under Rule 57Q of the Central Excise Rules, 1944 so as to entitle the appellant to Modvat credit.

Analysis: The definition of capital goods under Rule 57Q is of wide amplitude and is not confined only to the main machinery directly effecting production. It also covers components, spare parts and accessories essential for the running of the plant and machinery. Prior Tribunal decisions had treated items not directly producing or processing goods, but essential to the manufacturing process, as capital goods. Since the cables were necessary for supplying power to run the machinery, they formed an integral part of the plant and machinery used in manufacture.

Conclusion: The insulated copper cables and wires are capital goods and the appellant is entitled to Modvat credit thereon.

Final Conclusion: The impugned order denying credit was set aside and the appeal succeeded.

Ratio Decidendi: Under Rule 57Q, items essential for the effective running of manufacturing machinery, including power transmission cables, may qualify as capital goods even if they do not themselves directly produce or process goods.

---