Modvat credit as inputs remains available despite refusal of capital goods credit for the same goods.

Modvat credit under Rule 57A remained available even though credit as capital goods under Rule 57Q had been refused for the same goods. The dispute concerned grinding media, and the Tribunal followed the Larger Bench view that refusal under Rule 57Q does not bar input credit where the goods are otherwise eligible as inputs. The assessee's entitlement to credit under Rule 57A was accepted, and the denial of credit was set aside.

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Issues: Whether Modvat credit could be claimed under Rule 57A of the Central Excise Rules, 1944 when credit as capital goods under Rule 57Q had been refused for the same goods.

Analysis: The dispute concerned grinding media for which the assessee had sought credit as capital goods under Rule 57Q. The issue was treated as covered by the Larger Bench decision holding that, where the same goods are eligible as inputs, refusal of credit under Rule 57Q does not bar the assessee from claiming credit under Rule 57A. The Tribunal followed that view and accepted the assessee's entitlement.

Conclusion: The assessee was entitled to Modvat credit under Rule 57A notwithstanding the earlier refusal under Rule 57Q, and the denial of credit was set aside.

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