Modvat credit on manufacturing equipment and plant was allowed for material handling and post-production processing items.

Modvat credit under Rule 57Q was admissible on roto pumps, electric hoists, cooling vessels, conveyor belts and stainless steel tanks because the items were treated as capital goods used in manufacturing operations. Roto pumps and electric hoists were regarded as material handling equipment, stainless steel tanks as equipment or part of plant used for processing goods, and cooling vessels as necessary for cooling the product before filling and making it marketable. All disputed items were therefore held entitled to Modvat credit.

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Issues: Whether Modvat credit under Rule 57Q was admissible on roto pumps, electric hoists, cooling vessels, conveyor belts and stainless steel tanks as capital goods.

Analysis: Roto pumps and electric hoists were treated as material handling equipment and thus eligible for credit. Stainless steel tanks were used to keep material during manufacture and were regarded as equipment or part of plant used for processing goods. Cooling vessels were used to cool Chyawanprash after manufacture before filling in containers, which was an essential step in bringing the product into a marketable condition and therefore fell within the scope of capital goods under Rule 57Q.

Conclusion: All the disputed items were held entitled to Modvat credit.

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