Binding precedent on Modvat credit must be followed until set aside; collateral challenge by Revenue was rejected.

Subordinate appellate authorities must follow an earlier Tribunal ruling on Modvat credit so long as it remains operative, even if the Revenue it erroneous. The proper course for challenging such a ruling is to seek further legal remedy or file a rectification application before the same Bench, not to disregard the binding ratio in collateral proceedings. On that basis, the lower appellate authority was justified in following the earlier decision, and the Revenue's challenge failed.

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Issues: Whether the Revenue could challenge the grant of Modvat credit on the ground that the earlier Tribunal decision relied upon by the lower appellate authority was erroneous, and whether the lower appellate authority was justified in following that decision.

Analysis: The lower appellate authority had allowed Modvat credit by following the Tribunal's earlier decision on the same issue. The Revenue's objection was confined to the contention that the earlier Tribunal decision contained an error. It was held that, so long as the earlier decision remained operative, it had to be followed by subordinate authorities. If the Revenue considered that decision to be , the proper course was to seek further remedy in accordance with law or move a rectification application before the same Bench, and not to disregard its ratio in collateral proceedings.

Conclusion: The lower appellate authority correctly followed the Tribunal's earlier ruling, and the Revenue appeal failed.

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