Modvat credit extends to electric wires and cables essential for operating manufacturing machinery under Rule 57Q.

Electric wires and cables used to supply electricity within a manufacturing plant were treated as eligible for Modvat credit as capital goods under Rule 57Q where they were necessary for operating the manufacturing machinery. The Tribunal applied the broader principle that components, spare parts and accessories essential for running production machinery fall within the provision, and rejected the narrower view that capital goods must be limited to the main machinery or plant directly used in production. On that basis, cables integral to the machinery's operation qualified for credit in favour of the assessee.

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Issues: Whether electric wires and cables used for supply of electricity in the aluminium manufacturing plant were eligible for Modvat credit as capital goods under Rule 57Q.

Analysis: The Tribunal noted that earlier decisions had already extended Modvat credit to electric wires and cables used for supplying electricity to manufacturing machinery. It accepted that the narrower view, limiting capital goods only to the main machinery or plant directly used in production, had been rejected. The Tribunal relied on the principle that components, spare parts, and accessories essential for running the manufacturing machinery are covered by Rule 57Q, and that cables necessary for operation of the machinery could qualify as capital goods.

Conclusion: Electric wires and cables used for supply of electricity in the manufacturing plant were held eligible for Modvat credit as capital goods, in favour of the assessee.

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