Modvat credit for capital goods upheld for mill feed pipe, crane cables and kiln repair plates under Rule 57Q.

Auto mill feed pipe, PVC insulated cable and plain plates were treated as capital goods eligible for Modvat credit under Rule 57Q of the Central Excise Rules, 1944. The auto mill feed pipe was considered an integral part of the raw mix analyser with a direct nexus to manufacture of cement of the desired grade, bringing it within the Rule 57Q(1) explanation. PVC insulated cable used in an EOT crane was eligible because it supplied electric power to material handling equipment. Plain plates used for repair and replacement of worn or broken kiln shell parts were treated as part of the kiln plant, not mere construction material. Denial of Modvat credit was therefore set aside.

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Issues: Whether auto mill feed pipe, PVC insulated cable and plain plates were capital goods eligible for Modvat credit under Rule 57Q of the Central Excise Rules, 1944.

Analysis: The auto mill feed pipe was found to be an integral part of the raw mix analyser and to have a direct nexus with the manufacture of cement of the desired grade, thereby falling within the explanation to Rule 57Q(1). The PVC insulated cable used in the EOT crane was held eligible because the crane itself was material handling equipment and the cables supplied electric power to that capital good. The plain plates used for repair and replacement of worn out or broken parts of the kiln shell were treated as part of the kiln plant and not as mere construction material, so they also answered the description of capital goods under Rule 57Q(1).

Conclusion: The three items were held to be modvatable capital goods and the denial of Modvat credit was set aside.

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