JUDGMENT

Y.K. Sabharwal, J.—In this batch of appeals the only point in issue is regarding availing of Modvat Credit in respect of certain items by the manufacturers treating those items as ‘Capital goods’ in terms of Rule 57Q of the Central Excise Rules, 1944. The controversy was whether those items were ‘Capital goods’ or not within the meaning of Rule 57Q

2. Rule 57Q was introduced by Notification No. 4/94-CE dated 1 March, 1994. It enabled manufacturers to claim Modvat Credit of duty paid on ‘Capital goods’ used in their factory. The expression ‘Capital goods’ has been defined in the Explanation to Rule 57Q. For the proper appreciation of the controversy between the parties it would be convenient to reproduce Rule 57Q along with its Explanation. It reads as under:

“57Q. Applicability.—(1) The provisions of this section shall apply to finished excisable goods of the description specified in the Annexure below (hereinafter referred to as the ‘final products’) for the purpose of allowing credit of specified duty paid on the ‘Capital goods’ used by the manufacturer in his factory and for utilizing the credit so allowed towards payment of duty of excise leviable in the final prod