Modvat credit on general-purpose spares cannot be denied only for lack of machinery-specific declaration when actual use is recorded.

Modvat credit on nuts, bolts and screws used as spares could not be denied solely because the Rule 57T declaration did not identify the exact machinery in which they would be used. The record showed that the items were general-purpose spares used to replace worn-out parts of capital goods covered by Rule 57Q, and that the practical difficulty of naming the machinery at receipt was accepted. The declaration requirement was directed to ensure proper use of capital goods, which could be verified through stock, issue and actual-use records. The matter was remanded for verification of those records and fresh examination of eligibility.

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Issues: Whether Modvat credit on nuts, bolts and screws used as spares could be denied merely because the declaration under Rule 57T did not specify the machinery in which such items would ultimately be used, when the assessee maintained records showing actual use in capital goods covered by Rule 57Q.

Analysis: The denial of credit was founded only on the absence of a specific declaration naming the machinery at the time of receipt of general-purpose spares. The record showed that such items were used for replacement of worn-out parts of capital goods, and the practical difficulty of identifying the exact machinery at the time of receipt was accepted. The purpose of the declaration requirement was held to be ensure proper use of capital goods, and that purpose could be satisfied by maintaining stock and issue records and intimating the Revenue. The adjudicating authority was therefore required to examine the actual-use records and verify whether the items were used in machinery described as capital goods under Rule 57Q.

Conclusion: Denial of Modvat credit solely for want of a machinery-specific declaration under Rule 57T was not justified; the matter was remanded for verification of the assessee's records and fresh consideration of eligibility.

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