Modvat credit on inputs from a hundred percent export-oriented unit was denied where the additional customs duty was nil.

Modvat credit on inputs cleared from a hundred percent export-oriented undertaking was limited by the governing notification to the extent of additional duty of customs leviable under Section 3 of the Customs Tariff Act, 1975. Because the additional duty on the input concerned was nil, no credit was admissible. The Tribunal also held that its earlier final order, based on the Larger Bench ruling in Vikram Ispat, had not overlooked Notification No. 177/86 and disclosed no mistake apparent on the face of the record. The request for rectification or recall was therefore rejected.

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Issues: Whether the order dismissing the Revenue's appeal suffered from any mistake apparent on the record so as to justify recall or rectification, and whether Modvat credit on inputs cleared from a hundred percent export-oriented undertaking was admissible without restriction.

Analysis: The Tribunal held that the earlier final order had proceeded on the basis of the Larger Bench decision in Vikram Ispat and had not treated clearance from a hundred percent export-oriented undertaking as customs duty instead of excise duty. The governing notification restricted credit to the extent of duty equal to the additional duty leviable under Section 3 of the Customs Tariff Act, 1975. On the facts, the additional duty leviable on mica paper was nil, and therefore the admissible credit was nil. The Tribunal further held that the earlier order had not ignored Notification No. 177/86 and that no apparent error was shown on the face of the record.

Conclusion: The application for rectification or recall was not maintainable on the alleged ground of apparent mistake, and the claim for full Modvat credit was rejected.

Final Conclusion: The Tribunal found no infirmity in the earlier final order and refused to interfere with it.

Ratio Decidendi: Where a notification restricts Modvat credit on inputs from a hundred percent export-oriented undertaking to the extent of additional duty of customs leviable under Section 3 of the Customs Tariff Act, 1975, and that duty is nil, no Modvat credit is admissible and no rectifiable mistake arises merely because the duty paid by the undertaking is excise duty in character.

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