Modvat credit on components of capital goods upheld where the disputed items qualified as eligible components.

Items treated as components of capital goods qualified for Modvat credit, because credit was undisputedly available for such components. On that basis, the Department's statutory questions ceased to survive, and the assessee was held entitled to claim Modvat credit on the disputed items.

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Issues: Whether the disputed items were components of capital goods so as to entitle the assessee to Modvat credit.

Analysis: The items in dispute were treated as components of capital goods. It was undisputed that Modvat credit could be claimed in respect of components of capital goods. On that basis, the statutory questions framed by the Department did not survive.

Conclusion: The assessee was entitled to Modvat credit on the disputed items. The questions were answered against the Department.

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