Modvat credit on capital goods remains admissible where the governing precedent stands affirmed by dismissal of the challenge.

Modvat credit on specified capital goods under Rule 57Q of the Central Excise Rules, 1944 was held admissible. The Revenue's challenge was based only on the fact that a special leave petition had been filed against the Larger Bench ruling on the scope of capital goods credit, but that objection failed because the Supreme Court had dismissed the Revenue's petition. The governing precedent therefore continued to apply, and credit could not be denied on the same issue.

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Issues: Whether Modvat credit on the specified capital goods was admissible under Rule 57Q of the Central Excise Rules, 1944.

Analysis: The admissibility of credit on the items in question was not disputed by the Revenue in view of the Larger Bench decision on the scope of capital goods credit. The attempt to seek reversal only on the ground that a special leave petition had been filed against that decision was rejected because the Supreme Court had since dismissed the Revenue's petition and the governing ratio remained applicable.

Conclusion: Modvat credit on the capital goods was admissible and the Revenue appeal was rightly dismissed.

Ratio Decidendi: Where the governing precedent upholding admissibility of Modvat credit on capital goods stands affirmed by dismissal of the Revenue's challenge, credit cannot be denied on the same issue.

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