Capital goods classification under Modvat rules sustained for air conditioner and air compressor, preserving credit entitlement.

Air conditioner and air compressor were treated as "capital goods" under Rule 57Q, making Modvat credit admissible. Earlier Tribunal decisions supporting that classification could not be ignored merely because reference applications were pending in the High Court; absent any stay or reversal by a superior forum, those decisions continued to have binding force. The challenge to denial of credit therefore failed.

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Issues: Whether Modvat credit was admissible on air conditioner and air compressor as capital goods under Rule 57Q of the Modvat rules.

Analysis: The items in question were held to fall within the expression "capital goods" under Rule 57Q. The existence of earlier Tribunal decisions supporting that view could not be disregarded merely because reference applications were stated to be pending in the High Court. In the absence of any stay or reversal by a superior forum, those decisions retained their binding force.

Conclusion: Modvat credit was admissible on the air conditioner and air compressor, and the challenge to denial of credit failed.

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