Modvat credit on steel shots used in shot-blasting was allowed despite the Revenue's Rule classification objection.

Steel shots used in the shot-blasting process for manufacture of cast articles of iron were held eligible for Modvat credit under Rule 57Q of the Central Excise Rules, 1944. The Revenue accepted that the steel shots were used in or in relation to manufacture and objected only that the claim, if available, should fall under Rule 57A rather than Rule 57Q. On that admitted use, credit could not be denied merely because the item was characterised as falling under a different provision, so the Revenue's appeal failed.

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Issues: Whether Modvat credit on steel shots used in the shot-blasting process for manufacture of cast articles of iron was admissible under Rule 57Q of the Central Excise Rules, 1944.

Analysis: The Revenue did not dispute that the steel shots were used in or in relation to the manufacture of the final product. Its objection was only that the credit, if available, would fall under Rule 57A and not Rule 57Q. Since the use of steel shots in the manufacturing process was admitted, the assessee's entitlement to credit could not be denied on the ground urged in appeal.

Conclusion: The steel shots were eligible for Modvat credit under Rule 57Q of the Central Excise Rules, 1944, and the Revenue's appeal failed.

Ratio Decidendi: Where the use of an item in or in relation to manufacture is undisputed, Modvat credit cannot be denied merely because the Revenue characterises the item as falling under a different credit provision.

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