Modvat credit on electrical equipment as capital goods upheld under Rule 57Q for use in manufacturing and processing.

Modvat credit under Rule 57Q was held admissible on an electric motor, power cable, current drive and uninterrupted power supply system because the items were used in the manufacture and processing of final products and fell within Explanation 1 during the relevant period. The power cable was treated as part of the plant necessary for carrying on business, not a consumable item, and the other electrical items were also regarded as capital goods under the rule. The broader Tribunal interpretation of capital goods supported this view, and the Revenue's challenge failed.

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Issues: Whether Modvat credit under Rule 57Q of the Central Excise Rules, 1944 was admissible on electric motor, power cable, current drive and uninterrupted power supply system as capital goods.

Analysis: The goods were used in the manufacture and processing of the final products and fell within the scope of Explanation 1 to Rule 57Q during the relevant period. Power cable was treated as part of the plant necessary for carrying on the business and not as a consumable item, and other electrical items were also held to qualify as capital goods under the rule. The earlier reasoning of the lower appellate authority was consistent with the broader interpretation of capital goods recognised in the applicable Tribunal decisions.

Conclusion: Modvat credit was admissible on the disputed items as capital goods under Rule 57Q, and the Revenue's challenge failed.

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