Modvat credit exclusion under Rule 57Q applies only when goods clearly fall within the specific disqualifying category.

Modvat credit under Rule 57Q of the Central Excise Rules, 1944 could not be denied merely because the goods were used in assembly of a fire hydrant system and were alleged to be capital goods. The controlling question was whether those goods fell within the specific exclusion in Rule 57Q. The Tribunal had found that they did not, and no material was produced to dislodge that finding. On that basis, the exclusionary clause was held inapplicable and the Revenue's challenge failed. The principle stated is that classification as capital goods alone is insufficient to deny credit unless the goods are shown to fall within the express exclusion.

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Issues: Whether the goods used for assembly of the fire hydrant system were excluded from the definition of capital goods under Rule 57Q of the Central Excise Rules, 1944, so as to deny Modvat credit.

Analysis: The entitlement to Modvat credit depended not merely on the goods being capital goods, but on whether they fell within the specific exclusion under the relevant entry in Rule 57Q. The Tribunal had recorded a finding that the goods did not fall within the excluded category, and no material was shown to dislodge that finding.

Conclusion: The exclusionary clause under Rule 57Q was not attracted, and the Revenue's challenge failed.

Ratio Decidendi: Mere classification of goods as capital goods is insufficient to deny credit unless the goods are shown to fall within the specific exclusion provided in Rule 57Q.

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