Modvat credit for components and accessories used with eligible capital goods remains available despite separate tariff classification.

Modvat credit under Rule 57Q(1) extends to components, spares and accessories used with eligible capital goods, even if those items are not themselves listed as capital goods. The decisive test is their use as parts of qualifying capital goods, not their own tariff classification. A Board circular of 2-12-96 supported this reading by clarifying that parts, components and accessories used with covered capital goods remain creditable notwithstanding their separate classification. On that basis, UV bulbs and set spring sprue bush were treated as admissible for credit when used with eligible capital goods, and denial of credit solely because they were not independently specified was unjustified.

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Issues: Whether Modvat credit under Rule 57Q(1) could be denied merely because UV bulbs and set spring sprue bush were themselves not specified as capital goods, when they were used as components, spares or accessories of eligible capital goods.

Analysis: Rule 57Q(1) extended credit not only to the capital goods listed in the Table but also to components, spares and accessories of those goods. The decisive question was therefore not whether the disputed items were themselves classified as eligible capital goods, but whether they were used as parts of capital goods falling within the qualifying entries. An item excluded from the list of capital goods could still qualify when used as a component, spare or accessory of eligible capital goods. The Board's circular of 2-12-96 supported that interpretation by clarifying that parts, components and accessories used with qualifying capital goods were eligible for credit irrespective of their own classification.

Conclusion: Modvat credit was admissible on the disputed items as components or parts used with eligible capital goods, and denial of credit on the ground of their own tariff classification was not justified.

Ratio Decidendi: Under Rule 57Q(1), components, spares and accessories used with eligible capital goods are entitled to Modvat credit even if they are not themselves specified as capital goods or are excluded from the capital goods list by their own tariff heading.

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