Capital goods credit under Modvat was allowed for items with manufacturing nexus, applying the Jawahar Mills principle.

Modvat credit was treated as admissible on the disputed items as capital goods credit under Rule 57Q of the Central Excise Rules, 1944, because goods having a nexus with manufacture and falling within the scope of capital goods qualify for credit. The analysis applied the principle laid down by the Supreme Court in Jawahar Mills Ltd. to the items in question and found them covered by that test. On that basis, the credit claim was upheld and the Revenue's challenge was rejected.

---

---

Issues: Whether Modvat credit was admissible as capital goods credit on the items used by the respondent under Rule 57Q of the Central Excise Rules, 1944.

Analysis: The listed items were considered in light of the settled principle that goods having nexus with manufacture and satisfying the scope of capital goods under the relevant rule can qualify for credit. The decision relied on the ratio of the Supreme Court in Jawahar Mills Ltd., and applied that principle to the items in question.

Conclusion: The Modvat credit on the disputed items was admissible. The Revenue's appeal was rejected.

---