Modvat credit on blister packing machine upheld where equipment was used for in-house quality testing in manufacture.

A blister packing machine used within the assessee's manufacturing process to test whether film could withstand blister packing qualified as machinery for Modvat credit under Rule 57Q. The relevant test was the machine's use in the assessee's own manufacturing activity, not the fact that blister packing might be used by another industry for packing tablets. On that basis, denial of credit was unsustainable and the machine was held eligible for Modvat credit.

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Issues: Whether blister packing machine used as a quality control and checking device was eligible for Modvat credit as machinery under Rule 57Q of the Central Excise Rules.

Analysis: The final product manufactured by the assessee was film falling under Chapter 39. The machine was used in the assessee's manufacturing process for testing whether the film could withstand the blister packing process. The denial of credit on the ground that blister packing was used by another industry for packing tablets was held to be misplaced, because the relevant consideration was the use of the machine in the assessee's own manufacturing activity and not the end use of the product by some other industry.

Conclusion: The machine qualified for Modvat credit under Rule 57Q and the denial of credit was unsustainable.

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