Broad interpretation of capital goods under Rule 57Q supports Modvat credit for electrical machinery and related parts.

Rule 57Q was interpreted broadly to determine whether electrical machinery and parts of electrical machinery qualified as capital goods for Modvat credit. Applying the Larger Bench ruling in Jawahar Mills, the Tribunal treated machines, machinery, plant, equipment, apparatus, tools and appliances used in a factory for manufacture of final products as falling within the capital goods definition, and read the specific items in clause (d) as illustrative rather than restrictive. On that basis, the electrical machinery and related parts were covered by the rule, and Modvat credit was held admissible.

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Issues: Whether Modvat credit was admissible on electrical machinery and parts of electrical machinery as capital goods under Rule 57Q of the Central Excise Rules, 1944.

Analysis: The dispute turned on the scope of the definition of capital goods under Rule 57Q. The Tribunal applied the Larger Bench ruling in Jawahar Mills, which had held that machine, machinery, plant, equipment, apparatus, tools or appliances used in a factory for manufacture of final products fall within the ambit of capital goods. The specific inclusions in clause (d) were treated as illustrative of certain goods included to remove doubt and not as restricting the broader general definition. On that basis, the electrical machinery and related parts claimed by the assessee were held to be covered by the rule.

Conclusion: The Modvat credit was held admissible and the Revenue's appeal was rejected.

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