Modvat credit on components and spares for pollution control equipment was upheld under Rule 57Q and the Board circular.

Rule 57Q covered capital goods by classification and also separately covered components, spares and accessories by description, so the credit entitlement was not confined to particular chapters alone. On that interpretation, duty-paid components, spares and accessories used in pollution control equipment in the factory qualified for Modvat credit because they were used in relation to manufacture. The Board's Circular No. 276/110/96-TRU dated 2-12-1996 was treated as governing the dispute for the relevant period, and the Revenue's objection failed.

---

---

Issues: Whether Modvat credit was admissible on components, spares and accessories used in pollution control equipment in the assessee's factory under Rule 57Q of the Central Excise Rules, 1944, and whether the Board's Circular No. 276/110/96-TRU dated 2-12-1996 applied to the dispute.

Analysis: The Commissioner recorded that Rule 57Q, as applicable to the relevant period, covered capital goods by classification and also separately covered components, spares and accessories by description. On that basis, the scope of the entry for components, spares and accessories was not confined to particular chapters alone. The credit related to duty-paid goods used in the factory in relation to manufacture of cement, and the Board's circular was held to govern the issue for the relevant period.

Conclusion: Modvat credit was admissible on the disputed items and the Revenue's objection failed.

---