Modvat credit restoration after appellate relief is allowed immediately, even when part of the dispute goes back on remand.

Modvat credit on capital goods under Rules 57Q and 57T could be restored in the books once the adverse disallowance order was set aside in appeal. The earlier debit made by the assessee did not continue to operate against credit that the appellate authority had already allowed, even though part of the matter was remanded for de novo adjudication. The right to rebook the allowed credit arose immediately on setting aside of the original order, subject to any later adjustment if remand proceedings or a further departmental challenge produced a contrary result.

---

---

Issues: Whether the assessee could take back the Modvat credit in its books of account after the appellate authority had set aside the original disallowance order and remanded the matter for de novo adjudication.

Analysis: Modvat credit on capital goods was governed by Rules 57Q and 57T of the Central Excise Rules, 1944. The original order disallowing credit had been set aside by the Commissioner (Appeals) in respect of a substantial part of the credit, and only the balance was sent back for fresh adjudication. Once the disallowance order ceased to operate, the earlier debit made by the assessee could not continue to deprive it of the credit already allowed. The right to restore the credit in the books arose immediately on the setting aside of the adverse order, subject to any later adjustment if the remand proceedings or departmental appeal resulted in a contrary outcome.

Conclusion: The assessee was entitled to take back the Modvat credit allowed in appeal in its books of account without waiting for fresh adjudication, and the appeal was allowed.

---