Modvat credit on capital goods turned on proving actual use of disputed components before eligibility could be sustained.

Modvat credit on disputed capital goods depends on a clear finding on how the items were used, particularly where power distribution, light distribution and wall-mounting components are concerned. The order under appeal failed to establish the user of the items with sufficient clarity, and such use was material to eligibility. The matter therefore required reconsideration in the light of the Supreme Court's ratio in Jawahar Mills. The dispute was remanded for a fresh examination of the contested items after determining their actual use, and the appeal succeeded only to that limited extent.

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Issues: Whether Modvat credit on the disputed capital goods could be sustained without a clear finding on the use of the components, spares and accessories.

Analysis: The order under appeal did not clearly bring out the user of the items relating to power distribution, light distribution and wall mounting. In matters of capital goods eligibility, the user of the items is material, and the matter had to be examined in the light of the Supreme Court's ratio in Jawahar Mills.

Conclusion: The matter was remanded for reconsideration of the disputed items after determining their use, and the appeal succeeded only to that extent.

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