Modvat credit eligibility for PCB cards in an electric control panel was referred to the High Court as a question of law.

Modvat credit under Rule 57Q was examined in relation to PCB cards forming part of an electric control panel. The note states that capital goods under the Explanation to Rule 57Q(1) include machines, machinery, plant, equipment and their components, spare parts and accessories used for production or processing. Because the control panel was used only to regulate electricity supply to a furnace, its qualification as capital goods itself raised a referable question of law. On that basis, the same approach was extended to the PCB cards as parts of the panel, and the reference application was allowed for determination by the High Court.

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Issues: Whether the Revenue's reference application should be allowed on the question whether Modvat credit under Rule 57Q of the Central Excise Rules, 1944 is admissible on PCB cards forming part of an electric control panel when the control panel itself is not capital goods.

Analysis: The Explanation to Rule 57Q(1) defines capital goods to include machines, machinery, plant, equipment and their components, spare parts and accessories used for producing or processing goods or for bringing about a change in any substance for manufacture of final products. The order notes that the electric control panel was used only for controlling the supply of electricity to the furnace, and a question of law arose as to whether such a panel could itself be treated as used for producing or processing goods. Since the eligibility of the electric control panel for capital goods credit had already been referred to the High Court, the same approach was applied to the PCB cards as parts of that panel.

Conclusion: The reference application was allowed and the question of law concerning Modvat credit on PCB cards as parts of the control panel was referred to the High Court.

Final Conclusion: The Tribunal permitted the Revenue to seek reference of the stated question, leaving the substantive eligibility issue for decision by the High Court.

Ratio Decidendi: Where the eligibility of the principal item as capital goods itself raises a referable question of law, the same question can extend to parts of that item for purposes of reference under the excise law.

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