Modvat credit on pre-16.03.1995 capital goods remains admissible where amendment does not clearly exclude prior eligibility.

Modvat credit under rule 57Q remained available for capital goods received and recorded in the factory before 16.03.1995, because the amendment by Notification No. 11/95-C.E. (N.T.) did not create a new exclusion for goods already eligible under the pre-amendment rule. The amended explanation was read as excluding only capital goods that were otherwise not creditable under any prior rule or notification. On that plain construction, later specification of chapter headings did not retrospectively remove entitlement. The limitation argument was also not a basis for interference, and the Tribunal's allowance of credit was sustained.

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Issues: Whether Modvat credit was admissible on capital goods received before 16.03.1995 but covered by the amended explanation to rule 57Q of the Central Excise Rules, 1944 and Notification No. 11/95-C.E. (N.T.) dated 16.03.1995.

Analysis: The dispute turned on the scope of rule 57Q before and after its amendment. The capital goods had been received in the factory before 16.03.1995 and had been declared and entered in the prescribed register before that date. The amendment by Notification No. 11/95-C.E. (N.T.) did not create a new category of capital goods so as to exclude items that were already within the scope of rule 57Q. The amended sub-rule (2) excluded only those capital goods on which credit was not otherwise allowable under any rule or notification prior to 16.03.1995. On a plain reading, goods already eligible for credit under the earlier rule were not taken out of entitlement merely because the notification later specified chapter headings. The plea on limitation also did not furnish any basis for interference.

Conclusion: Modvat credit on the goods received before 16.03.1995 was admissible, and the revenue's challenge failed.

Final Conclusion: The appeal did not disclose any substantial question of law and the Tribunal's order allowing credit to the assessee was sustained.

Ratio Decidendi: An amendment to the capital goods definition under rule 57Q does not retrospectively deny Modvat credit to goods that were already eligible under the pre-amendment rule, unless the amended text clearly excludes such eligibility.

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