Modvat credit entitlement sustained as departmental appeals failed in view of earlier supporting decisions.

Modvat credit was allowed to the respondents, and both the Commissioner (Appeals) and CEGAT sustained that allowance. The Revenue's second-stage appeal was rejected because earlier decisions had already supported the respondents' entitlement, so the departmental challenge was found to have no force. The respondents' cross-objections were also dismissed.

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Issues: Whether Modvat credit was admissible to the assessees notwithstanding their eligibility to exemption under Notification No. 1/93-C.E., and whether the credit taken under Rule 57A could be denied under Rule 57C.

Analysis: The assessees had opted to pay duty and availed Modvat credit on inputs used in the manufacture of their final products. The adjudicating authority, relying on prior Tribunal and Supreme Court decisions, held that the credit was admissible and dropped the demand. The appellate authority affirmed that view. The pending reference applications in other similar matters did not displace the settled legal position already applied to the issue.

Conclusion: The Modvat credit was held to be admissible and the Revenue's challenge failed.

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