Cenvat credit on capital goods cannot be denied merely because the assessee first classified them as inputs.

Tungsten Carbide Tools were eligible for Cenvat credit as capital goods where the assessee had initially described them as inputs. The Tribunal held that a mistaken initial classification did not bar credit if the substantive conditions for capital goods were otherwise satisfied, and a later, more specific view could prevail over an earlier broader observation. The benefit could not be denied solely because the claim was first made under a different head. Credit on the tools was therefore allowed and the Revenue's challenge failed.

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Issues: Whether Tungsten Carbide Tools were eligible for Cenvat credit as capital goods when the respondent had initially treated them as inputs.

Analysis: The tools were held to be capital goods by the first appellate authority, and the dispute turned on whether the initial description of the goods as inputs barred credit as capital goods. The Tribunal accepted that the earlier Larger Bench observation that goods claimed as inputs cannot simultaneously get Modvat credit as capital goods did not prevent a later correct claim where the assessee had wrongly classified the goods at the initial stage. It was also noted that a later and more specific view permitted credit where the substantive conditions were satisfied, and that benefit could not be denied merely because the claim was raised under a different head at first.

Conclusion: The respondent was entitled to credit on Tungsten Carbide Tools as capital goods, and the Revenue's challenge failed.

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