Returned defective goods as Modvat inputs qualify for credit under binding Tribunal precedent

Defective goods returned by customers for remaking are treated as inputs for Modvat credit where prior binding Tribunal precedent, including Larger Bench rulings, has taken that view. The analysis applies the existing Tribunal line that returned defective goods used in remaking satisfy the input requirement, and notes that the assessee's own product had already been covered by an earlier decision on the same basis. The operative effect is that such returned goods qualify for Modvat credit, consistent with the cited precedent.

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Issues: Whether defective goods returned by customers for remaking could be treated as inputs for the purpose of Modvat credit.

Analysis: The issue was covered by prior Tribunal decisions, including Larger Bench rulings, which held that defective goods returned for remaking qualify as inputs for Modvat purposes. The Tribunal also noted that the assessee's own product had been covered by an earlier decision taking the same view.

Conclusion: Defective goods returned for remaking are inputs for the purpose of Modvat credit, and the appeals were allowed.

Ratio Decidendi: Goods returned by customers for remaking are to be treated as inputs for Modvat credit when prior binding Tribunal precedent so holds.

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