Capital goods credit for corrosive-material storage tanks accepted where special tanks were necessary for the manufacturing process.

Storage tanks used to store hydrofluoric acid were treated as capital goods under Rule 57Q because they were necessary for manufacture and used for storing a corrosive raw material integral to the process. The Tribunal relied on earlier decisions allowing credit for tanks, bins and cylinders used for hazardous or process-related substances, and held that specially built storage equipment of this kind falls within the statutory description of capital goods. As a result, capital goods credit was held admissible.

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Issues: Whether storage tanks used for storing Hydrofluoric Acid qualify as capital goods under Rule 57Q of the Central Excise Rules.

Analysis: The storage tanks were used for storing a raw material essential to the manufacturing process, and the material was corrosive and required specially built tanks. The Tribunal noted that earlier decisions had allowed capital goods credit for tanks, bins and cylinders used for storage of hazardous or process-related substances. On that basis, the tanks were treated as items necessary for manufacture and covered by the statutory description of capital goods.

Conclusion: The storage tanks are capital goods and the assessee is entitled to capital goods credit.

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