Capital goods credit under Rule 57Q allowed for power cables and speed variator, but denied for unproven control items.

Capital goods credit under Rule 57Q was available for electric wires and cables used to supply power to machinery, because they fell within the wider concept of plant, and for the speed variator, which qualified as capital goods. Credit was not available for the limit switch and M.C.B. because their use in producing or processing goods was not substantiated. The penalty was set aside in the circumstances of the case.

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Issues: Whether capital goods credit under Rule 57Q of the Central Excise Rules, 1944 was admissible in respect of electric wires and cables, speed variator, limit switch and M.C.B.

Analysis: The Larger Bench ruling on the scope of capital goods credit under Rule 57Q was followed. On that basis, wires and cables, being necessary for supply of power to machinery and covered within the wider concept of plant, qualified for credit, and speed variator also qualified as capital goods. The claim for limit switch and M.C.B. failed because their use in producing or processing goods was not substantiated. The penalty was also set aside in the circumstances of the case.

Conclusion: Capital goods credit was allowed for electric wires and cables and speed variator, but denied for limit switch and M.C.B., and the penalty was set aside.

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