Plant test for Modvat credit: durable business-use items treated as capital goods under Rule 57Q.

Items necessary for carrying on business, which are not consumables and have a fairly high degree of durability, may qualify as "plant" for Modvat credit under Rule 57Q. Applying its earlier decision on the same class of goods, the Tribunal treated the listed items as part of the plant used in the assessee's business and therefore eligible as capital goods. The governing test focused on functional necessity and durability rather than mere description of the items, with the result that Modvat credit was available.

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Issues: Whether the listed items were eligible capital goods under Rule 57Q for availing Modvat credit.

Analysis: The items were examined in the light of the Tribunal's earlier decision on the same class of goods. The governing test applied was whether the items formed part of the plant necessary for carrying on the assessee's business and whether they were not consumables but articles having a fairly high degree of durability. On that basis, the listed items were treated as falling within the expression "plant".

Conclusion: The listed items were eligible for Modvat credit as capital goods under Rule 57Q.

Ratio Decidendi: Items which are necessary for carrying on the business, are not consumables, and possess a fairly high degree of durability can fall within "plant" for the purpose of Modvat credit under Rule 57Q.

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