Modvat credit cannot be denied merely because inputs and finished goods were shown under the same tariff heading.

Modvat credit was examined in the context of whether it could be denied merely because the inputs and finished goods were reflected under the same tariff heading. The inputs were unmachined castings, which were classifiable under Chapter 73 despite having been shown under Chapter 84 at the relevant time. On that basis, the demand founded on identical classification of inputs and final products was not sustainable, particularly since the proper classification of such castings had already been settled in favour of Chapter 73.

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Issues: Whether Modvat credit was disallowable on the ground that the inputs and the finished products were shown under the same tariff heading.

Analysis: The inputs were unmachined castings, which were classifiable under Chapter 73, even though they had been shown under Chapter 84 at the relevant time. The demand based on identical classification of inputs and final goods was therefore not sustainable. The record also showed that the question of correct classification of such castings had been settled in favour of Chapter 73.

Conclusion: The demand could not be sustained and the appeal was allowed.

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