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
Presented by eximkey.com