Modvat credit on capital goods for sliver manufacture upheld under Rule 57Q, following binding precedent.

Modvat credit on duty-paid capital goods used in the manufacture of sliver under Heading 52.02 was claimed even though such goods were outside the scope of capital goods under Rule 57Q before 21-10-1994. The Madras HC followed earlier precedent that had already decided the issue against the Revenue and held that the credit was admissible on that basis. The question was therefore answered in favour of the assessee and against the Revenue.

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Issues: Whether Modvat credit on duty paid on capital goods used for manufacture of sliver falling under Heading 52.02 could be allowed when such goods were excluded from the scope of capital goods under Rule 57Q of the Central Excise Rules, 1944 prior to 21-10-1994.

Analysis: The issue stood covered by earlier decisions holding the point against the Revenue. The Court followed the existing precedent and answered the question in line with those rulings.

Conclusion: The issue was answered against the Revenue and in favour of the assessee.

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