Modvat credit on cleaning and packing materials upheld, with Rule 57Q declaration treated as sufficient for input credit.

Modvat credit was held admissible on carbon tetrachloride used to clean machinery components, as cleaning material for such use qualified as an eligible input. Steel strips and seal kits used for packing and sealing finished goods were treated as packing materials falling under inputs rather than capital goods, so credit was also allowable on those items. A declaration filed under Rule 57Q was considered sufficient to support credit under Rule 57A as well, following the earlier Tribunal view relied on in the order. The denial of credit was therefore not sustainable.

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Issues: Whether Modvat credit was admissible on carbon tetrachloride used for cleaning machinery components, and on steel strips and seal kits used for packing and sealing finished goods, where the declaration had been filed under Rule 57Q.

Analysis: Carbon tetrachloride used for cleaning machinery components was treated as an eligible input, following the view that cleaning material used for such purposes qualifies for credit. Steel strips and seal kits, though not capital goods under Rule 57Q, were in substance packing materials better covered as inputs under Rule 57A. A declaration filed under Rule 57Q was held sufficient to support credit under Rule 57A as well, in line with the earlier Tribunal view relied upon in the order.

Conclusion: Modvat credit was admissible on all the disputed items, and the denial of credit was not sustainable.

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