Modvat credit on replaced motor parts was admissible where duty was paid and the capital goods record was undisputed.

Modvat credit under Rule 57Q was treated as admissible on duty paid on replaced parts of electric motors returned after repair, because the motors were capital goods and their components, spares and accessories were covered by the Rule 57Q table. The goods were sent to the original supplier for repair and returned under invoices issued under Rule 57S(7); duty was paid only on the value of the replaced parts, and credit was claimed only to that extent. With the factual findings on receipt and duty payment remaining undisputed, the amended Rule 57Q read with Notification No. 6/97-C.E. (N.T.) supported the credit, and the Revenue's appeal was rejected.

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Issues: Whether Modvat credit was admissible under Rule 57Q of the Central Excise Rules, 1944 on the duty paid on replaced parts of electric motors returned after repair under invoices issued by the job worker.

Analysis: The motors were sent for repair to the original supplier and were returned under cover of invoices issued under Rule 57S(7) of the Central Excise Rules, 1944. It was found that duty had been paid only on the value of the replaced parts and that credit was taken only to that extent. Electric motors were covered as capital goods under the relevant tariff entry, and the components, spares and accessories of such goods were also eligible for credit under the table to Rule 57Q(1). The lower appellate authority's factual findings were not challenged, and the amended Rule 57Q, read with Notification No. 6/97-C.E. (N.T.), supported the credit.

Conclusion: Modvat credit on the replaced parts was admissible, and the Revenue's appeal was rejected.

Ratio Decidendi: Components, spares and accessories of capital goods are eligible for Modvat credit under Rule 57Q when duty has been paid on the replaced parts and the factual basis of receipt and duty payment is undisputed.

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