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Circular No.276/110/96-TRU dated 2/12/96

Subject: Availment of Modvat credit on components, spares and accessories under Rule 57Q of the Central Excise Rules, 1944.

Rule 57Q of the Central Excise Rules, 1944 allows credit of duty paid on capital goods used by the manufacturer of specified goods. Capital goods eligible for credit have been defined in Explanation (1) annexed to Rule 57Q. Clause (a) to (c) of the said explanation cover specified capital goods falling under Chapter 82,84,85 and 90 and clause (d) covers components, spares and accessories of the said capital goods.

2. It has been brought to the notice of the Board "that clause (d) of Explanation (1) is being interpreted by some of the field officers covering only such components, spares and accessories which would fall under Chapter shown under clauses (a) to (c) and credit is allowed only on those components, spares and accessories which are covered under the said chapters.

3. The matter has been examined. With effect from 23.7.1996, capital goods eligible for credit under rule 57Q have been specified either by their classification or by their description. Clause (a) to (c) of Explanation (1) of the said rule cover capital goods by their classification whereas clause (d) covers goods by their description viz. components, spares and accessories of the said capital goods. It may be noted that there is a separate entry for components, spares and accessories and no reference has been made about their classification. As such, scope of this entry .is not restricted only to the components, spares and accessories falling under Chapters 82,84,85 or 90 but covers all components, spares and accessories of the specified goods irrespective in rule 57Q (i.e. prior to 23.7.1996) when credit was available on components, spares and accessories of the specified capital goods irrespective of their classification.

4. Accordingly, it is clarified that all parts, components, accessories, which are to be us with capital goods of clauses (a) to ( c) of Explanation (1) of rule 57Q and classifiable under any Chapter heading are eligible for availment of Modvat credit.

Sd/-
(T.R. Rustagi)
Commissioner (TR)

F.No. 354/141/96-TRU


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