Modvat credit denied for fabricated steel tanks on chassis classified outside capital goods and new input claim barred on appeal.

Fabricated steel tanks mounted on a chassis were treated as goods under Chapter 87 and, on that classification, fell outside the definition of capital goods under Rule 57Q then in force. They were also not accepted as part of the metal rolling mill or as material handling equipment, so Modvat credit as capital goods was unavailable. The alternative claim that the tanks qualified as inputs was rejected because no such case had been advanced before the lower authorities, and a fresh input-credit basis could not be raised for the first time in appeal. The result was disallowance of Modvat credit on both grounds.

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Issues: Whether fabricated steel tanks mounted on a chassis were eligible for Modvat credit as capital goods under Rule 57Q, or alternatively as inputs.

Analysis: The goods were held to be fabricated steel tanks mounted on a chassis falling under Chapter 87, as reflected in the invoices, and therefore outside the ambit of capital goods under Rule 57Q as it stood at the relevant time. They were not accepted as part of the metal rolling mill or as material handling equipment. The attempt to treat them as inputs was also rejected because no such case had been laid before the lower authorities and the claim could not be introduced at the appellate stage.

Conclusion: The goods were not eligible for Modvat credit either as capital goods or as inputs, and the disallowance was upheld against the assessee.

Ratio Decidendi: Goods specifically excluded by tariff classification from the definition of capital goods under the applicable Modvat rule cannot claim credit as capital goods, and a fresh alternative claim of input credit cannot be raised for the first time in appeal without a foundational case.

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