Capital goods credit for captive power plant cabling and trays allowed as accessories used in relation to manufacture.

Cables, conductors, electrical terminal kits and cable trays used in a captive power plant within factory premises qualified for capital goods credit under Rule 57Q because they were used to generate and transmit power for the manufacturing plants and fell within machinery, components and accessories used in or in relation to manufacture. The Explanation to Rule 57Q was read harmoniously with Rule 57S to give effect to that expression. The disallowance of credit was therefore held unsustainable and credit was allowed in favour of the assessee.

---

---

Issues: Whether cables, conductors, electrical terminal kits and cable trays used in a captive power plant installed within the factory premises were eligible for capital goods credit under Rule 57Q.

Analysis: The items were used for generating and transmitting power to the manufacturing plants, and were treated as accessories required for use in or in relation to manufacture. The Explanation to Rule 57Q covered machinery, apparatus, tools, appliances and their spare parts, components and accessories, and Rule 57Q was read harmoniously with Rule 57S to give effect to the expression "in or in relation to" manufacture for eligibility to credit.

Conclusion: The disallowance of capital goods credit was not sustainable, and the items qualified for credit in favour of the assessee.

---