Modvat credit on grinding wheels upheld as a possible view, leaving no referable question of law for reference.

Grinding wheels were treated as eligible for Modvat credit because, on one view, they qualified as inputs under Rule 57A of the Central Excise Rules, 1944, and, on the alternative view, they could still fall within the machinery-related credit scheme under Rule 57Q. The High Court found the Tribunal had adopted a possible view consistent with an earlier decision of the same Court and noted no revenue prejudice. On that basis, it held that no referable question of law arose under Section 35H(1) of the Central Excise Act, 1944, and the reference petition was dismissed.

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Issues: Whether the Tribunal was in allowing Modvat credit on grinding wheels as inputs under Rule 57A of the Central Excise Rules, 1944, and whether any referable question of law arose for reference under Section 35H(1) of the Central Excise Act, 1944.

Analysis: The Tribunal had followed its earlier decision, and the High Court noted that an earlier decision of the same Court had taken a similar view. It was observed that if the goods were treated as inputs, Modvat credit was admissible under Rule 57A, and if they were excluded from the category of inputs and treated as part of machines etc., credit would still be admissible under Rule 57Q. The Court treated the Tribunal's view as a possible view and found no loss to the Revenue.

Conclusion: No referable question of law arose for reference, and the petition was dismissed.

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