Chapter 84 goods qualify as capital goods under Rule 57Q absent express exclusion, with consequential re-credit following eligibility.

Goods classifiable under Chapter 84 were treated as capital goods for Modvat credit under Rule 57Q unless expressly excluded, and their use with chlorine cylinders did not defeat eligibility based on their own tariff classification. On that basis, valves for chlorine cylinders falling under Heading 8481.80 qualified for credit. Once that principal eligibility issue was resolved in favour of the assessee, the related denial of restoration also failed, because the re-credit claim was only consequential to the disputed reversal. The reversed amount was therefore allowable to be restored, and the connected demand and denial of re-credit did not survive.

---

---

Issues: (i) Whether valves for chlorine cylinders, classifiable under Heading 8481.80, were eligible for Modvat credit as capital goods under Rule 57Q; (ii) Whether the assessee was entitled to re-credit of the amount earlier reversed, the disallowance being consequential to the demand dispute.

Issue (i): Whether valves for chlorine cylinders, classifiable under Heading 8481.80, were eligible for Modvat credit as capital goods under Rule 57Q.

Analysis: Rule 57Q(1) and the table appended thereto covered all goods falling under Chapter 84, subject only to the stated exclusions. The valves were admittedly classifiable under Heading 8481.80 and were not shown to fall within any exclusion. Their use in relation to chlorine cylinders did not deprive them of their own classification-based eligibility. The entry in the table had to be read according to its plain scope, and the valves were treated as capital goods with an independent function.

Conclusion: The valves were eligible for Modvat credit as capital goods under Rule 57Q, in favour of the assessee.

Issue (ii): Whether the assessee was entitled to re-credit of the amount earlier reversed, the disallowance being consequential to the demand dispute.

Analysis: The rejection of re-credit rested only on the confirmation of the demand relating to eligibility of the valves. Once the credit on the valves was held admissible, the basis for denying restoration of the reversed amount disappeared. The claim for re-credit therefore followed as a direct consequence of the allowance on the principal issue.

Conclusion: The assessee was entitled to re-credit of the amount earlier reversed, in favour of the assessee.

Final Conclusion: The demand and the connected denial of re-credit did not survive, and the assessee obtained full relief in both appeals.

Ratio Decidendi: Where goods are specifically classifiable under Chapter 84 and are not covered by any express exclusion in Rule 57Q, they qualify as capital goods for Modvat credit irrespective of the chapter classification of the goods with which they are used; consequential restoration of reversed credit follows once eligibility is upheld.

---