Modvat credit for material handling equipment upheld where steel wire rope formed part of eligible capital goods.

Steel wire rope used as part of material handling equipment was treated as eligible for Modvat credit under Rule 57Q because equipment used to move raw material or components within the manufacturing process could fall within the scope of capital goods. Earlier Tribunal authority and the Larger Bench view in Jawahar Mills supported a construction of the relevant explanation based on the language in force at the material time. The Revenue's reliance on a different decision was distinguished because it concerned different items and did not address the present type of material handling equipment. Credit was therefore allowed and the assessee succeeded.

---

---

Issues: Whether steel wire rope used as part of material handling equipment was eligible for Modvat credit under Rule 57Q.

Analysis: The claim for credit was supported by earlier Tribunal authority recognising that equipment used for movement of raw material and components or accessories assisting the manufacturing process could fall within the scope of capital goods under Rule 57Q. The decision relied on by the Revenue was distinguished because it dealt with different items and did not consider the specific eligibility of material handling equipment of the present type. The Larger Bench view in Jawahar Mills also supported construction of the relevant explanation according to the language applicable at the material time and recognised eligible capital goods covered by the notification.

Conclusion: Steel wire rope, being part of equipment used to move material from one place to another, was held eligible for Modvat credit under Rule 57Q, and the assessee succeeded.

---