Export duty-free clearances are not exempted goods for Modvat reversal, so Rule 57C and Rule 57CC do not apply.

Goods cleared without payment of duty under Notification No. 47/94-C.E. for export-oriented manufacture were treated as non-exempt clearances for Modvat purposes. The Tribunal's view was that where removal is made under a notification issued for export under Rule 13 of the Central Excise Rules, 1944, Rule 57C does not apply because such goods are not exempted goods. As Rule 57C was inapplicable, the consequential application of Rule 57CC also did not arise. The practical effect was that Modvat credit could be retained on the clearances in question.

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Issues: Whether stainless steel wire rods cleared without payment of duty under Notification No. 47/94-C.E. for export-oriented manufacture were exempted goods so as to attract Rule 57C of the Central Excise Rules, 1944, and consequently Rule 57CC.

Analysis: The clearance was made under Notification No. 47/94-C.E. in the context of export, and the Tribunal had already held that goods removed under a notification issued under Rule 13 of the Central Excise Rules, 1944, for export without payment of duty are not to be treated as exempted goods for the purpose of Rule 57C. Since Rule 57C did not apply to such clearances, the further consequential application of Rule 57CC also did not arise. The Department was unable to show any reason to depart from the earlier view.

Conclusion: Rule 57C was held inapplicable to the clearances in question, and Rule 57CC also did not apply. The assessee was entitled to retain Modvat credit.

Final Conclusion: The appeal failed because duty-free clearances for export under the notification did not constitute exempted removals for Modvat reversal purposes.

Ratio Decidendi: Goods cleared without payment of duty under a notification issued for export under Rule 13 of the Central Excise Rules, 1944, are not exempted goods for Rule 57C purposes, and Rule 57CC cannot be applied on that basis.

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