Modvat credit on E.O.T. crane parts remained admissible despite the capital goods exclusion under Rule 57Q.

Modvat credit was held admissible on parts of an E.O.T. crane under Rule 57Q because the goods were components of capital goods and the exclusion for Heading 84.31 did not defeat eligibility. The Tribunal noted that Rule 57Q covered components, spares and accessories of capital goods within the relevant entries, and relied on the Board's circular dated 2-12-96 clarifying that parts, components and accessories used with capital goods remained eligible for credit even if classifiable under any chapter heading. The denial of credit was therefore unsustainable.

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Issues: Whether Modvat credit was admissible on parts of an E.O.T. crane under Rule 57Q of the Central Excise Rules, 1944 in view of the exclusion clause and the Board's circular.

Analysis: The dispute concerned denial of credit on the ground that the parts of the E.O.T. crane fell under Heading 84.31 and were excluded from the definition of capital goods. The Tribunal noted that the Revenue did not dispute that the goods were parts of an E.O.T. crane and that Rule 57Q permitted credit on components, spares and accessories of capital goods covered by the relevant serial entries. It also relied on the Board's circular dated 2-12-96, which clarified that parts, components and accessories used with capital goods and classifiable under any chapter heading were eligible for Modvat credit, and the circular had not been withdrawn.

Conclusion: Modvat credit on the parts of the E.O.T. crane was admissible and the denial of credit was unsustainable.

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