Modvat credit on syrup tanks allowed where the equipment was part of the sugar clarification system and duty-paid classification stood unchallenged.

Modvat credit on M.S. fabricated syrup tanks was admissible as capital goods because the tanks were used mainly for chemical mixing and treatment in the sugar clarification system, not as mere storage tanks. The manufacturer had cleared them on duty payment under Heading 8421.10, and that classification was not challenged by the Revenue. Credit taken on duty-paying documents could not be denied by reclassifying the goods under a different tariff heading at the recipient's end. The appellants were therefore entitled to Modvat credit on the tanks as capital goods.

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Issues: Whether Modvat credit on M.S. fabricated syrup tanks was admissible as capital goods despite their treatment as storage tanks under Chapter 73 of the Central Excise Tariff.

Analysis: The goods were cleared by the manufacturer on duty payment under Heading 8421.10, and that classification at the time of clearance was not challenged by the Revenue. The recipient took credit on the strength of the duty paying documents. The tanks were found to be used mainly for chemical mixing and treatment of syrup in the sugar clarification system, and were not mere storage tanks. Since they formed part of a specified system and the classification at the recipient's hands could not be altered, the credit could not be denied merely because of a different possible tariff heading.

Conclusion: The appellants were entitled to Modvat credit on the syrup tanks as capital goods.

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