Rule 57Q Modvat credit requires specific findings that each item qualifies as capital goods or spare parts thereof.

Modvat credit under Rule 57Q is admissible only where each item is shown, on specific findings, to be capital goods or spare parts of capital goods within the statutory definition. Credit on gaskets, electrical insulators, spares for control valve packing and copper cables could not be sustained on a broad or cryptic view of use, because the record lacked clear findings on the nature of each item, its manner of use, and how that use satisfied the rule. The order allowing credit was set aside and the matter remanded for fresh determination of eligibility under Rule 57Q.

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Issues: Whether Modvat credit under Rule 57Q was admissible on gaskets, electrical insulators, spares for control valve packing and copper cables as capital goods or spare parts thereof.

Analysis: Eligibility for credit under Rule 57Q depends upon a finding that the goods themselves answer the definition of capital goods or are spare parts of such capital goods. The lower authority allowed credit on a broad and cryptic view of use, without recording a proper finding on the nature of each item, where and how it was used, and whether its use brought it within the statutory definition. In that situation, the grant of credit could not be sustained on the existing record.

Conclusion: The order allowing Modvat credit was set aside and the matter was remanded for fresh decision on the eligibility of the goods under Rule 57Q.

Ratio Decidendi: Modvat credit under Rule 57Q can be allowed only after a specific finding that the goods are capital goods or spare parts of capital goods within the statutory definition.

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