Modvat credit on duty-paid goods returned for repair was allowed to avoid double duty on the same goods.

Modvat credit was held admissible on duty-paid goods received back only for repair and reconditioning after their earlier clearance on payment of duty. The reasoning was that credit had been taken only to the extent of duty actually paid, and denying it would have caused double levy on the same goods. The conflicting Tribunal views were resolved in favour of allowing credit, and the order-in-appeal was set aside while the order-in-original was restored.

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Issues: Whether Modvat credit was admissible in respect of duty-paid goods received back for repair and reconditioning after their clearance on payment of duty.

Analysis: The competing Tribunal decisions on the point were found to be contradictory. The goods had been cleared on payment of duty and were received back only for repair and reconditioning. Credit had been taken only to the extent of duty paid, and denial of the credit would have resulted in duty being paid twice on the same goods.

Conclusion: Modvat credit was rightly allowed, and the order-in-appeal was set aside while the order-in-original was restored.

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