Modvat re-credit on re-exported inputs turned on proof of return to factory and fresh factual examination.

Re-credit of Modvat reversed on inputs intended for re-export depended on whether the goods were actually returned to the factory and used in manufacture. The record showed conflicting factual positions: the original authority treated the prescribed procedure as unmet, while the appellate authority rejected the claim for lack of proof of receipt back into the factory. Because the documentary basis for the assessee's defence had not been properly examined, the claim could not be finally decided on the existing record. The Board's circular dated 30-12-1996 also had to be considered, and the matter was remanded for fresh adjudication.

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Issues: Whether the assessee was entitled to re-credit of Modvat reversed on inputs that were intended for re-export but were later brought back to the factory and used in manufacture, and whether the matter required reconsideration by the adjudicating authority.

Analysis: The record showed a dispute on a material fact: the original authority proceeded on the basis that the applicable procedure had not been followed, while the appellate authority rejected the claim for want of evidence of receipt of the goods back in the factory. The earlier reversal of credit had been made only in anticipation of re-export under Rule 52A read with Rule 57F. Since the assessee asserted that the inputs were in fact returned and consumed in manufacture, and the documentary basis for that claim had not been properly examined, the matter could not be finally decided without a fresh appraisal of the defence and documents. The Board's circular dated 30-12-1996 was also required to be considered.

Conclusion: The claim for re-credit was not finally adjudicated on merits and the matter was sent back for fresh decision by the adjudicating authority.

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