Refractory materials used as furnace lining qualify as capital goods, while concrete and mortar do not under Rule 57Q.

Refractory ceramic goods, refractory cement, moulds for metals, metal carbides, glass mineral materials, rubber or plastics, and electro cast refractories used as furnace lining in glass manufacture were treated as eligible capital goods under Rule 57Q. The amendment extending Rule 57Q to refractories was regarded as clarificatory and applied to the relevant period. Concrete and mortar, however, were characterised as construction materials used for lining and upkeep of the furnace, not as capital goods for manufacture. Modvat credit was therefore available on the refractory items but not on concrete and mortar.

---

---

Issues: Whether Modvat credit was admissible under Rule 57Q on refractory ceramic goods, refractory cement, moulds for metals, metal carbides, glass mineral materials, rubber or plastics and electro cast refractories, and whether concrete and mortar were eligible as capital goods.

Analysis: The items were examined with reference to their use in the furnace installed for manufacture of glass and glassware. Refractories used as lining material for the furnace were treated as eligible capital goods, and the amendment bringing refractories within the scope of Rule 57Q was treated as clarificatory and applicable to the relevant period. Concrete and mortar were found to be construction materials used for lining and upkeep of the furnace and not capital goods for manufacture. The Tribunal therefore accepted Modvat eligibility for the refractory items and rejected it for concrete and mortar.

Conclusion: Modvat credit was admissible on refractory ceramic goods, refractory cement, moulds for metals, metal carbides, glass mineral materials, rubber or plastics and electro cast refractories, but not on concrete and mortar.

Final Conclusion: The impugned order was modified to the extent that the refractory items were held eligible for capital goods treatment, while the denial of credit on concrete and mortar was sustained, resulting in a partial allowance of the appeal.

Ratio Decidendi: Refractory materials forming part of the furnace and used as lining material for manufacturing machinery are eligible as capital goods under Rule 57Q when the amendment is clarificatory, whereas ordinary construction materials such as concrete and mortar are not.

---