Storage tanks for manufacture-linked raw materials qualify as capital goods for Modvat credit under Rule 57Q.

Storage tanks used to store liquid raw materials directly connected with the manufacturing process qualify as capital goods for Modvat credit under Rule 57Q of the Central Excise Rules, 1944. The reasoning was that such materials could not be kept in a warehouse or godown and the tank formed an integral part of the manufacturing set-up. Prior Tribunal decisions had already treated similar storage tanks as eligible, so denial of Modvat credit was not sustained and consequential relief followed.

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Issues: Whether a chemical storage tank used for storing raw materials employed in the manufacture of final products is to be treated as capital goods for the purpose of Modvat credit under Rule 57Q of the Central Excise Rules, 1944.

Analysis: The storage tank was used to store liquid raw materials that could not be kept in a warehouse or godown and were directly connected with the manufacturing process. The issue had already been settled by several Tribunal decisions holding that such storage tanks, when used for materials connected with manufacture, qualify as capital goods for Modvat credit under Rule 57Q.

Conclusion: The storage tank was held to be capital goods, and denial of Modvat credit was not sustained.

Final Conclusion: The appeal succeeded and the assessee obtained consequential relief.

Ratio Decidendi: A storage tank used for storing raw materials that are essential to the manufacture of final products qualifies as capital goods for Modvat credit under Rule 57Q.

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