Modvat credit on humidification plant as capital goods follows binding later precedent after earlier Tribunal view was overruled.

Modvat credit was held admissible on a humidification plant as capital goods because the denial rested on an earlier Tribunal view that had been expressly disapproved by the Larger Bench in Jawahar Mills and affirmed by the Supreme Court. The binding later precedent governed entitlement, so the humidification plant could not be excluded from credit on the basis of the overruled contrary view. The issue was decided in favour of the assessee, confirming that an overruled Tribunal decision cannot control Modvat eligibility where higher authority precedent has settled the position.

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Issues: Whether Modvat credit was admissible on a humidification plant as capital goods.

Analysis: The denial of credit was founded on an earlier Tribunal view in Shanmugaraja Spinning Mills, but that view was expressly disapproved by the Larger Bench in Jawahar Mills. The Larger Bench held that the earlier contrary view was not correct, and that position was affirmed by the Supreme Court. In light of the binding Larger Bench and Supreme Court authorities, the humidification plant could not be excluded from the benefit of Modvat credit on the basis adopted in the impugned order.

Conclusion: Modvat credit on the humidification plant was admissible as capital goods, and the issue was decided in favour of the assessee.

Ratio Decidendi: Where a prior Tribunal view has been overruled by a Larger Bench and affirmed by the Supreme Court, the later binding precedent governs entitlement to Modvat credit on capital goods.

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