Capital goods under Rule 57Q include machinery used for processing connected with manufacture, including incidental or ancillary activities.

A machine used to emboss serial numbers on parts of textile machinery was treated as capital goods under Rule 57Q because embossing was a processing activity undertaken by the manufacturer and manufacture includes incidental or ancillary processes. The machine was therefore used in connection with processing of the goods, bringing it within the scope of capital goods. On that basis, the impugned order was set aside and relief followed in favour of the assessee.

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Issues: Whether a machine used for embossing serial numbers on parts of textile machinery qualifies as capital goods under Rule 57Q.

Analysis: The relevant expression in Rule 57Q is "processing". Embossing serial numbers on machine parts is a process undertaken by the manufacturer. The concept of manufacture also includes processes incidental or ancillary thereto. Since the machine was used in processing the textile machinery parts, it falls within the scope of capital goods.

Conclusion: The machine qualifies as capital goods under Rule 57Q. The impugned order was set aside and relief followed in favour of the assessee.

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

Ratio Decidendi: A machine used by the manufacturer in a processing activity connected with manufacture, including an incidental or ancillary process, can qualify as capital goods under Rule 57Q.

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