Modvat credit on pre-cut-off capital goods remains admissible where the governing rule preserves entitlement.

Modvat credit on capital goods received before 16-3-1995 remained admissible where the goods were otherwise eligible under Rule 57Q, because Notification No. 11/95-C.E. (N.T.) did not eliminate entitlement in such cases. The Tribunal noted that the amendment barred credit only for specified goods received before the cut-off date, while preserving credit where admissibility existed under the governing rule or another applicable notification. On that basis, credit could not be denied merely because receipt preceded the amendment date, and the Revenue's challenge failed.

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Issues: Whether Modvat credit on capital goods received in the factory before 16-3-1995 but credited in May 1995 was admissible under Rule 57Q of the Central Excise Rules, 1944, in view of Notification No. 11/95-C.E. (N.T.) dated 16-3-95.

Analysis: Notification No. 11/95-C.E. (N.T.) inserted sub-rule (2) in Rule 57Q, which barred credit on specified capital goods received before 16-3-1995, but the notification also preserved credit where such capital goods were otherwise eligible under any other rule or notification prior to that date. The capital goods in question were covered by the expanded scope of Rule 57Q, and the Tribunal had already taken the view in earlier decisions that credit could not be denied merely because the goods had been received before 16-3-1995, provided the credit was otherwise admissible. The pendency of a reference application before the High Court did not justify keeping the matter pending.

Conclusion: Modvat credit was admissible to the assessee, and the Revenue's challenge failed.

Ratio Decidendi: Where capital goods are otherwise eligible for Modvat credit, credit cannot be denied solely because the goods were received before the cut-off date fixed by an amending notification, if the governing rule or notification preserves such entitlement.

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