Packing machines used only after manufacture do not qualify as capital goods under Rule 57Q for Modvat credit.

Carton sealing machines used only for packing finished shoes did not qualify as capital goods under Rule 57Q because the rule covered machines used for producing, processing, or bringing about a change in the substance of the final product. Since the machines operated only after manufacture to seal cartons and were not used in making the shoes themselves, they fell outside the narrower Modvat eligibility test then applicable. As a result, Modvat credit was not admissible on such packing machinery.

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Issues: Whether Carton Sealing Machines used only for packing the finished shoes were eligible for Modvat credit as capital goods under Rule 57Q.

Analysis: The definition of capital goods under Rule 57Q covered machines, machinery, plant, equipment and similar items used for producing or processing goods or for bringing about any change in the substance for manufacture of final products. The disputed machines were used only for sealing cartons after the shoes had been manufactured and were not used in the production or processing of shoes themselves. Packing, even if relevant to marketability and treated as part of manufacture for other purposes, did not by itself bring such machines within the narrower definition of capital goods under Rule 57Q as it then stood.

Conclusion: Carton Sealing Machines used only for packing were not capital goods under Rule 57Q and Modvat credit was not admissible.

Ratio Decidendi: A machine used only for post-manufacture packing, and not for producing or processing the final product or changing its substance, does not qualify as capital goods under Rule 57Q.

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