Modvat credit on forged shafts remains admissible when further machining is needed only to make them fit for machinery.

Modvat credit under Rule 57Q was admissible on proof-machined forged shafts received for use in mill rollers, even though further machining or refining was needed before installation. The determining point was that the goods were received for intended use in the machinery, and the additional processing only made them suitable for fitting. On that basis, the need for subsequent machining did not justify denial of credit, and the refusal of credit was held unsustainable.

---

---

Issues: Whether Modvat credit under Rule 57Q was admissible on proof machined forged shafts received for use in mill rollers, notwithstanding further machining or refining required before fitting them in the machinery.

Analysis: The credit claim was examined in light of the earlier Tribunal view that shafts or similar items do not cease to qualify merely because some processing is needed to make them fit for use in the factory. The decisive consideration was that the goods were received for use in the machinery and the additional activity was only to render them suitable for installation. On that reasoning, the requirement of further machining did not justify denial of credit.

Conclusion: Modvat credit was admissible, and the denial of credit was unsustainable.

---