Cenvat credit on machine components allowed where amended capital goods rules required classification and factory use, not the old test.

Under the amended Rule 57AA, Cenvat credit on components, spares and accessories of a wagon-loading machine was admissible because the relevant test was the prescribed classification of the goods and their use in the factory. The machine was used in the factory, its parts formed components, spares and accessories of that machine, and the goods satisfied the applicable classification. An earlier denial of credit based on a pre-amendment decision was inapplicable because it arose under a materially different legal regime. Credit was therefore allowed and the assessee's claim succeeded.

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Issues: Whether Cenvat credit was admissible on components, spares and accessories of a wagon-loading machine under Rule 57AA when the earlier denial of credit was under the pre-amendment rule.

Analysis: The definition of capital goods under Rule 57AA was materially different from the earlier rule. Under the amended provision, the relevant requirements were the prescribed classification of the goods and their use in the factory of the manufacturer. On the facts, there was no dispute that the wagon-loading machine was used in the factory, that its parts formed components, spares and accessories of the machine, and that the goods fell within the relevant classification. The earlier decision, rendered under the old rule, was therefore not applicable to the present controversy.

Conclusion: Cenvat credit was admissible and the denial of credit was unsustainable.

Final Conclusion: The impugned order was set aside and the assessee's claim to credit succeeded.

Ratio Decidendi: Where the statutory definition of capital goods is amended and the new rule requires only prescribed classification and use in the factory, credit cannot be denied on the basis of an earlier decision rendered under a different legal regime.

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