Capital goods under Modvat rules exclude steel sheets used as raw materials for tanks and moulds

Iron and steel sheets used as raw materials for manufacturing MS tanks and MS moulds did not qualify as capital goods under Rule 57Q because they did not fit within the statutory description of machinery, plant, equipment, or their components, spares, or accessories. On that basis, Modvat credit was held inadmissible on the sheets, as the goods were used in construction rather than as capital goods themselves.

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Issues: Whether iron and steel sheets used for constructing tanks and moulds were eligible for Modvat credit as capital goods under Rule 57Q.

Analysis: The goods were used as raw materials for manufacture of MS tanks and MS moulds and did not answer the statutory description of machine, machinery, plant, equipment, or their components, spares, or accessories. On that footing, they fell outside the definition of capital goods under Rule 57Q.

Conclusion: Modvat credit was not admissible on the iron and steel sheets, and the denial of credit was upheld.

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