Modvat credit on pre-amendment capital goods remained admissible where earlier entitlement was already established.

Amended Rule 57Q excluded capital goods received before 16.03.1995, but preserved Modvat credit where entitlement had already arisen under the earlier regime. On the recorded facts, the goods had been received before the amendment, while declarations were filed and the items were entered in the register before that date, so prior eligibility was treated as continuing and credit was admissible. The limitation finding in respect of three invoices was also upheld because the appellate authority had made a specific finding and no sufficient basis was shown to disturb it.

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Issues: (i) whether Modvat credit on capital goods received in the factory before 16.03.1995 was admissible under Rule 57Q as amended by Notification No. 11/95-CE (NT) dated 16.03.1995; (ii) whether the Commissioner (Appeals) was justified in extending the benefit of limitation in respect of three invoices.

Issue (i): whether Modvat credit on capital goods received in the factory before 16.03.1995 was admissible under Rule 57Q as amended by Notification No. 11/95-CE (NT) dated 16.03.1995.

Analysis: The amended sub-rule excluded capital goods received before 16.03.1995, except where credit had already been allowable under an earlier rule or notification. The goods in question were received before 16.03.1995, but the record showed that the declarations were filed and the items were entered in the register before that date. The earlier entitlement under the pre-amendment regime was not shown to be displaced in the manner suggested by Revenue.

Conclusion: The credit was admissible, and this issue was decided in favour of the assessee.

Issue (ii): whether the Commissioner (Appeals) was justified in extending the benefit of limitation in respect of three invoices.

Analysis: The Commissioner (Appeals) recorded a specific finding on limitation, and the Revenue did not seriously dispute that finding in the appeal. No basis was shown to interfere with the appellate view on limitation.

Conclusion: The finding on limitation was upheld in favour of the assessee.

Final Conclusion: The appellate order allowing Modvat credit and rejecting the Revenue's challenge was sustained, and the Revenue's appeal failed.

Ratio Decidendi: Where amended Rule 57Q preserved credit for capital goods eligible under the earlier regime, capital goods received before the amendment continued to qualify if the prior entitlement was otherwise established.

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