Modvat credit on repaired capital goods extends to full duty paid on the assessable value, not just fresh inputs used.

Modvat credit under Rule 57Q was admissible on the entire duty paid on repaired capital goods cleared by a job worker under a Rule 52A invoice on the full assessable value. The legal point was that credit was not restricted to the duty relatable only to fresh inputs used in the repairs, because the invoice reflected duty on the complete assessable value, including the original value of the machine and job work charges. The Revenue's objection to availing credit on the full duty paid was therefore not sustainable.

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Issues: Whether Modvat credit under Rule 57Q was admissible on the entire duty paid by the job worker on the repaired capital goods cleared under Rule 52A invoice, or only on the duty attributable to the fresh inputs used in the repairs.

Analysis: The repaired machine was cleared by the job worker under a Rule 52A invoice on payment of excise duty on the full assessable value, which included the original value of the machine as well as the job work charges. The duty credit issue turned on whether the recipient could avail credit of the entire duty so paid. The earlier Tribunal view applied the principle that where repaired capital goods are returned under duty-paid invoice on the full assessable value, Modvat credit is available on the duty actually paid on that full value, and not restricted only to the duty relatable to the fresh inputs used in the repairs.

Conclusion: Modvat credit on the entire duty paid by the job worker was admissible, and the Revenue's objection to the credit was not sustainable.

Ratio Decidendi: Where repaired capital goods are cleared under a duty-paid invoice on the full assessable value, credit under Rule 57Q is available on the entire duty paid on that assessable value.

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