Capital goods for Modvat credit include plant and machinery items used in manufacturing, not civil structure components.

Angles, joists, M.S. rounds, computer hardware and UPS used in the manufacturing setup were treated as capital goods for Modvat credit under Rule 57Q because they formed part of plant and machinery and were used as inputs of capital goods in the production process. In the absence of evidence that the items had become part of a civil structure or were embedded in earth, their character as capital goods was retained, and Modvat credit was allowable.

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Issues: Whether angles and joists/M.S. rounds, computer hardware and UPS qualified as capital goods for the purpose of Modvat credit under Rule 57Q of the Central Excise Rules, 1944.

Analysis: The items were claimed to have been used in the manufacturing setup, including as part of a conveying system and with testing equipment in the manufacturing process. The appellate record showed findings that the disputed goods were used as inputs of capital goods and formed part of plant and machinery within the meaning of Rule 57Q(1)(b). No evidence was produced to establish that the items had become part of a civil structure or were embedded in earth so as to lose their character as capital goods.

Conclusion: The items were held to be eligible capital goods and Modvat credit was allowable.

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