Refund of accumulated Modvat credit cannot be denied beyond remand scope where drawback or rebate was the only issue for verification.

Refund of accumulated Modvat credit on inputs used in exported goods was treated as admissible, and the lower appellate authority could not refuse it on grounds beyond the earlier remand. The remand had confined verification to whether drawback under the Customs Act or rebate under Central Excise law had been claimed on the exported final products. By reopening the broader question of accumulation and relying on Rule 57AC(7) and Notification No. 35/2000-C.E. (N.T.) to deny refund, the authority exceeded the remand scope. As no finding was recorded that drawback or rebate had in fact been availed, the refund could not be denied and consequential relief followed.

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Issues: Whether the refund claim of accumulated Modvat credit on inputs used in exported goods was admissible, and whether the lower appellate authority could deny the refund on grounds not permitted by the earlier remand directions.

Analysis: The earlier remand had already held that refund was admissible subject to verification only on the limited question whether drawback under the Customs Act or rebate under the Central Excise law had been claimed on export of the final products. The subsequent order instead reopened the broader question of accumulation of credit and proceeded on the footing that Rule 57AC(7) and Notification No. 35/2000-C.E. (N.T.) did not contemplate refund of accumulated credit. That approach went beyond the scope of the remand and was impermissible, because the only issue left for verification was whether drawback or rebate had been availed, and no finding was recorded that such benefit had in fact been claimed.

Conclusion: The refund could not be denied on the wider ground adopted by the lower appellate authority, and the assessee was entitled to the refund with consequential relief.

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