Capital goods credit for D.G. set switch gear and control gear upheld under a broad Rule 57Q interpretation.

Switch gear and control gear used with D.G. sets were treated as capital goods for credit under Rule 57Q because they functioned as components regulating electricity flow and were used with specified machinery. Applying the broad interpretation in Jawahar Mills, the Tribunal held that components, spares and accessories of machinery used for producing or processing goods fall within capital goods credit. On that basis, the goods were eligible for credit and the Revenue's appeal failed.

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Issues: Whether switch gear and control gear used as spare parts in D.G. sets qualify as capital goods for the purpose of availing capital goods credit under Rule 57Q.

Analysis: The goods were found to be used with the D.G. sets and to regulate the flow of electricity. The lower authorities had treated the D.G. sets as covered by the relevant explanation to Rule 57Q, and the Tribunal followed the Larger Bench decision in Jawahar Mills, which gave a broad construction to the expression used for producing or processing goods. On that basis, components, spares and accessories of the specified machinery were held to fall within the scope of capital goods credit.

Conclusion: Switch gear and control gear used with D.G. sets are eligible capital goods under Rule 57Q, and the Revenue's appeal fails.

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