Modvat credit on capital goods upheld where concurrent factual findings supported admissibility in exempted job-work operations.

Modvat credit on capital goods was treated as admissible where the assessee's unit had been taken over and the goods were used in relation to exempted job-work activity. The Bombay High Court noted that the authorities below had relied on the object and operation of the relevant job-work and exempted intermediate goods notifications, which were viewed as comparable for Modvat purposes, and had also found the earlier Tribunal precedent applicable. The Revenue's challenge was rejected because it sought to reopen concurrent factual findings in an appeal under section 35G, and the Supreme Court ruling cited for distinction was found inapposite.

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Issues: Whether Modvat credit on capital goods was admissible where the assessee's unit was taken over and the capital goods were used in relation to exempted job-work activity, and whether the concurrent findings allowing such credit could be interfered with in appeal under section 35G.

Analysis: The appeal was confined to substantial questions of law, but the challenge was directed mainly against concurrent factual findings recorded by the Commissioner (Appeals) and the Tribunal. Those authorities had held that the notifications governing job-work and exempted intermediate goods were intended to facilitate the Modvat scheme and were comparable in object and operation, and that the assessee's unit had been taken over by another manufacturer of dutiable final products. On that basis, the credit on the capital goods was held to be legally available. The Revenue's attempt to reopen the factual conclusion and to distinguish the earlier Tribunal decision was rejected, as the finding of admissibility rested on concurrent appreciation of facts and the cited precedent was found applicable. The reliance placed on a different Supreme Court decision was also held to be inapposite.

Conclusion: The Modvat credit was held admissible and no interference with the concurrent findings was warranted; the appeal failed.

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