Modvat Credit on machinery components and kiln-related materials upheld as eligible capital goods for manufacture.

Modvat Credit was held admissible for Accmon LC-70, Automatic Grease Lubricating System, and Belt & Sway as capital goods or eligible inputs/components used in manufacture. Credit for Accmon LC-70 was supported by prior Tribunal precedent on refractory and lining materials used in kiln or furnace applications. The other items were treated as components, parts, or accessories of machinery employed in manufacture, falling within the relevant capital goods definition. The order granting credit was sustained and the revenue challenge was rejected.

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Issues: Whether Modvat Credit was admissible on Accmon LC-70, Automatic Grease Lubricating System, and Belt & Sway as capital goods or eligible inputs/components used in manufacture.

Analysis: The entitlement to credit on Accmon LC-70 was supported by prior Tribunal decisions allowing credit on refractory and lining materials used in kiln or furnace applications. As to the other items, they were treated as items used with machinery employed in manufacture, and the relevant definition of capital goods included components, parts and accessories of machinery, plant or equipment used in manufacture of the final product.

Conclusion: Modvat Credit was admissible on all the disputed items and the revenue's appeal failed.

Final Conclusion: The order in appeal granting credit was sustained and the revenue challenge was rejected.

Ratio Decidendi: Items used as components, parts or accessories of machinery employed in manufacture qualify for Modvat Credit as capital goods, and refractory-related materials used in kiln or furnace applications may also be eligible where precedent supports such treatment.

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