Modvat credit cannot be denied solely on tariff classification when parts are actually used in forklift truck manufacture.

Modvat credit for parts used in manufacturing forklift trucks could not be denied merely because the parts were classified under Heading 8708.00. The decisive issue was actual use in or in relation to manufacture, and tariff classification alone was held insufficient to defeat credit where there was no proof that the goods were not so used. The unchallenged finding that actual use was not disproved supported rejection of the denial of credit.

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Issues: Whether Modvat credit could be denied on parts used in the manufacture of forklift trucks merely because the parts were classified under Heading 8708.00 of the Central Excise Tariff Act, 1985.

Analysis: Heading 8708.00 covers parts and accessories of motor vehicles of Headings 87.01 to 87.05. The decisive question was whether the goods were actually used in or in relation to the manufacture of forklift trucks. The classification of the parts under Heading 8708.00 by itself was not sufficient to deny credit, particularly when there was nothing to show that the goods were not, or could not be, so used. The finding that actual use was not disproved remained unchallenged.

Conclusion: Modvat credit could not be denied solely on the basis of the tariff classification, and the appeal was rejected.

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