Functional use test supports Modvat credit for measuring equipment and a fork lift truck used in factory operations.

Modvat credit under Rule 57Q was considered admissible for roundness measuring equipment and a fork lift truck as capital goods where the equipment was used in relation to manufacture and the fork lift truck was used for handling goods and equipment within the factory. The Tribunal applied the functional use test in manufacture and relied on prior decisions treating such items as eligible capital goods. On that basis, it found no reason to disturb the concurrent findings of the lower authorities, and the credit on both items remained admissible.

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Issues: Whether Modvat credit under Rule 57Q was admissible as capital goods in respect of the roundness measuring equipment and the fork lift truck.

Analysis: The lower authorities had allowed credit on both items after finding that the measuring equipment was used in relation to the manufacture of the final product and that the fork lift truck was used for handling goods and equipment within the factory. The Tribunal noted that the issue had already been settled by prior decisions applying the test of functional use in manufacture and treating such items as eligible capital goods. On that basis, the Tribunal found no reason to interfere with the concurrent findings.

Conclusion: The credit on both items was held admissible and the Revenue appeal failed.

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