Tariff classification governed Modvat credit eligibility, and alarm annunciator goods under Heading 85.31 were excluded from credit.

Modvat credit under Rule 57Q was not admissible for an alarm annunciator classified under Heading 85.31 because, for the relevant period, capital goods falling under that heading were excluded from the eligible category. Eligibility turned on the tariff classification of the capital goods, not on their use in manufacture of the final product. The denial of credit was therefore upheld in favour of the Revenue.

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Issues: Whether Modvat credit under Rule 57Q of the Central Excise Rules, 1944 was admissible on an Alarm annunciator classified under Heading 85.31 of the Central Excise Tariff Act, 1985.

Analysis: The dispute was confined to eligibility of capital goods credit for an Alarm annunciator classified under Heading 85.31. The relevant period was one in which capital goods falling under Heading 85.31 were excluded from the goods eligible for Modvat credit under Rule 57Q(1). The applicability of the provision depended on the tariff entry covering the capital goods, and not on their use in manufacture of the final product.

Conclusion: Modvat credit was not admissible, and the denial of credit was upheld in favour of the Revenue.

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