Full Judgment
2. Ld. Counsel Shri R.S. Dinkar submitted that Gear Boxes by definition in the (sic) authority like the World Book Encyclopedia International (1996 Edition) Gear is a mechanical device that transfers rotating motion and power from one part of a machine to another. If such is function the Gear Boxes fully satisfied the definition of capital goods under Rule 57Q. So also measuring tanks is part of the plant which is used to have the exact quantity of raw material required for the final product.
3. We have heard Shri S.V. Singh the ld. JDR. We find that the matter lies in a short compass and with the consent of the parties, we grant stay and take up the appeal itself.' Under Rule 57Q(i)(b) Capital Goods means components spare parts and accessories of the aforesaid machines, machinery, plant, equipment, apparatus mentioned in Rule 57Q(i)(a). In this case the Gear Boxes function as part of machine being mechanic device installed in the reaction vessels for driving the stirrer for preparation of slurry in the reactor, after addition of various raw materials. Measuring tanks comes in the use for pumping into it measured quantity of the liquid raw material. These tanks are connected to the glass tube which shows exact amount of liquid passing through the tube thus, the measuring tank is the necessary component in the appellants plant for the manufacture of their final product. Judging from the function of gear boxes and the measuring tank as described above, we are of the view that these goods, satisfy the definition of Capital Goods given under Rule 57Q(i)(b) of the Central Excise Rules, 1944. In this view of the matter the Collector's conclusion that Modvat credit is ineligible on this goods is unsustainable. The Appeal is accordingly allowed.