Capital goods under Rule 57Q do not include materials used to erect a blast furnace.

Cement and steel structurals used to erect a blast furnace were held not to fall within the definition of capital goods under Rule 57Q of the Central Excise Rules, 1944, because they are construction materials used to bring the furnace into existence rather than items used in production or processing. Although a blast furnace itself may be machinery employed in manufacture, the materials for its erection are anterior to its operational use and do not acquire capital goods status on that basis. The Tribunal therefore found no referable question of law under Section 35G of the Central Excise Act, 1944, and rejected the reference application.

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Issues: Whether cement and steel structurals used for erecting a blast furnace could be treated as capital goods under Rule 57Q of the Central Excise Rules, 1944, so as to justify reference of a question of law under Section 35G of the Central Excise Act, 1944.

Analysis: The definition of capital goods under Rule 57Q covers machine, machinery, plant, equipment and similar items used for producing or processing goods or for bringing about a change in the manufacture of the final product. A blast furnace may itself be regarded as machinery used in production, but materials used to erect it are part of the process of bringing the furnace into existence and are anterior to its use in manufacture. On that basis, the Tribunal found no infirmity in the view that such construction materials do not qualify as capital goods, and no legal question warranting reference to the High Court arose.

Conclusion: The reference application was rejected.

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