Modvat credit cannot be denied on grounds outside the show cause notice where Rule 57E(2) certification remains valid.

Modvat credit could not be denied on grounds not set out in the show cause notice, especially where the Superintendent's certificate under Rule 57E(2) evidencing duty payment remained valid and unwithdrawn. The notice referred only to the alleged inapplicability of Rule 57E(2) and non-maintenance of RG 23A Part-I, so the appellate authority was not justified in relying on fresh objections such as co-relation issues or other matters outside the notice. The assessee's declaration and explanation regarding RG 23A Part-I supported entitlement to credit, and the denial of credit was unsustainable.

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Issues: Whether Modvat credit could be denied on grounds not contained in the show cause notice and contrary to the certificate issued under Rule 57E(2) of the Central Excise Rules.

Analysis: The denial of credit was founded in the notice only on two grounds, namely, the alleged inapplicability of Rule 57E(2) and non-maintenance of RG 23A Part-I. The certificate issued by the Superintendent evidencing payment of duty remained valid and had not been withdrawn. The lower appellate authority was therefore not justified in travelling beyond the certificate or introducing fresh reasons, such as alleged co-relation issues and other matters not forming part of the notice. The production of the declaration and the explanation regarding maintenance of RG 23A Part-I supported the assessee's case.

Conclusion: The denial of Modvat credit could not be sustained, and the assessee was entitled to the credit.

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