Modvat credit on inputs used in manufacturing process and capital goods allowed for black steel tubes and aluminium sheets.

Modvat credit under Rule 57Q was considered admissible for black steel tubes and aluminium rolled sheets treated as capital goods. Black steel tubes were used to carry cool water for temperature control of critical machine parts and were therefore regarded as participating in the manufacturing process. Aluminium rolled sheets were used as insulating material for electrostatic precipitators, and were held to form part of those capital goods. On that basis, credit was allowed on both items and the revenue appeal was rejected.

---

---

Issues: Whether Modvat credit was admissible on black steel tubes and aluminium rolled sheets as capital goods under Rule 57Q of the Central Excise Rules.

Analysis: Black steel tubes were found to be used for carrying cool water to control the temperature of critical machine parts and, therefore, to participate in the manufacturing process. Aluminium rolled sheets were used as insulating material for electro static precipitators, which were themselves treated as capital goods, and the sheets were held to form part of such capital goods.

Conclusion: Modvat credit was admissible on both black steel tubes and aluminium rolled sheets, and the revenue appeal was rejected.

---