Modvat credit for humidification plant upheld where import classification under accepted tariff headings was not excluded as capital goods.

Modvat credit on a humidification plant and its components was treated as admissible capital goods under Rule 57Q where the goods had been assessed at import under Customs Tariff Headings 84.45 and 84.79. That accepted classification could not be re-opened or altered by Central Excise authorities at the receiver's end. Because those headings were not excluded from the definition of capital goods under Rule 57Q, the Revenue's objection to credit was unsustainable and the credit claim succeeded.

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Issues: Whether Modvat credit on the humidification plant and its components was admissible as capital goods under Rule 57Q of the Central Excise Rules, 1944, despite the Revenue's claim that the goods were classifiable under an excluded tariff heading.

Analysis: The goods had been assessed by the Customs House under Headings 84.45 and 84.79 of the Customs Tariff, and that assessment had not been challenged. The classification accepted at the import stage could not be altered by the Central Excise authorities at the receiver's end. Since Headings 84.45 and 84.79 were not excluded from the definition of capital goods under Rule 57Q, the denial of credit was unsustainable.

Conclusion: Modvat credit was admissible and the Revenue's objection failed.

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