Modvat credit on laboratory equipment spares remained admissible despite different tariff classification under Rule 57Q

Modvat credit was available on spares of laboratory equipment and allied items because Rule 57Q treated components, spares and accessories of specified capital goods as eligible inputs. The Board's circular clarified that this coverage was not confined to any particular chapter heading, so the separate tariff classification of the spares did not by itself defeat credit if they were genuine spares of eligible capital goods. As the main laboratory equipment was not shown to be excluded under the rule, the disputed items remained creditable and the Revenue's objection failed.

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Issues: Whether Modvat credit was admissible on spares of laboratory equipment and allied items when the main equipment was not excluded under Rule 57Q and the items were classified under chapter headings mentioned in the exclusion table.

Analysis: Rule 57Q, as applicable, treated specified capital goods and their components, spares and accessories as eligible for credit. The Board's circular clarified that the entry covering components, spares and accessories was not confined to any particular chapter heading and that such items remained eligible irrespective of their own classification, provided they were spares of specified capital goods. The main laboratory equipment was not shown to be excluded under the rule, and the fact that the spares were classifiable under different chapter headings did not by itself disqualify them from Modvat credit.

Conclusion: Modvat credit on the disputed spares was admissible, and the Revenue's challenge failed.

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