Modvat credit on lubricants allowed where machinery use qualified as inputs and Rule 57Q declaration supported eligibility.

Modvat credit was treated as admissible on lubricant oil and grease used to lubricate machinery employed in manufacturing final products, because such goods were covered by the Larger Bench view recognising them as eligible inputs. A declaration filed under Rule 57Q was also accepted as sufficient where the goods otherwise fell within Rule 57A. On that reasoning, the challenge to denial of credit failed and the credit claim stood allowed.

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Issues: Whether Modvat credit was admissible on lubricants when the assessee had availed credit under the capital goods route.

Analysis: The issue was covered by the Larger Bench decision holding that lubricant oil and grease used for lubricating machinery employed in the manufacture of final products are eligible inputs. It was also held that a declaration filed under Rule 57Q is sufficient for extending credit on goods which are inputs within the meaning of Rule 57A. Applying that ruling, the claim for denial of credit did not survive.

Conclusion: The credit was held admissible and the appeal failed.

Final Conclusion: The Revenue's challenge was rejected in view of the binding Larger Bench view on eligibility of lubricants for credit treatment.

Ratio Decidendi: Lubricant oil and grease used for lubricating machinery in manufacture are eligible inputs for Modvat credit, and a Rule 57Q declaration can suffice where the goods fall within Rule 57A.

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