Capital goods credit on conveyor belts allowed where equipment is essential to manufacturing and raw material handling.

Capital goods credit under Rule 57Q was considered admissible for a conveyor belt used as essential material handling equipment in cement manufacture. The conveyor belt was treated as necessary for completing the manufacturing process and for moving raw materials within the production chain. Applying the Explanation to Rule 57Q(1), goods used for producing the final product, processing goods for manufacture, or bringing about a change in substances used in manufacture qualify as capital goods where the statutory requirement is met. On that reasoning, credit was allowed on the conveyor belt and the Revenue's challenge failed.

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Issues: Whether capital goods credit under Rule 57Q of the Central Excise Rules was admissible in respect of conveyor belt.

Analysis: The conveyor belt was found to be essential for the completion of the manufacturing process of cement and to function as material handling equipment for movement of raw materials. Applying the interpretation of "capital goods" in the Explanation to Rule 57Q(1), goods used for producing the final product, for processing goods for manufacture, or for bringing about change in substances used in manufacture qualify for credit where the requirement is satisfied.

Conclusion: Capital goods credit was admissible on the conveyor belt and the Revenue's challenge failed.

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