Modvat refund after protest reversal allowed where no show cause notice was issued and exemption claim was not barred.

Refund of Modvat credit reversed under protest was treated as admissible because the credit, if considered inadmissible, had to be objected to and disallowed by show cause notice within the prescribed period. The Tribunal found no such notice had been issued and declined to interfere with the appellate order granting refund. It also rejected the Revenue's contention that an assessee could not claim exemption under Notification No. 8/96-C.E. while availing Modvat credit. The operative effect was that the refund remained allowable on the facts stated.

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Issues: Whether refund of Modvat credit reversed under protest was admissible when no show cause notice had been issued for alleging ineligibility of the credit and the assessee had claimed exemption under Notification No. 8/96-C.E.

Analysis: The Tribunal noted that the credit entry had to be objected to and disallowed by issuing notice if it was considered inadmissible, and that such action had not been taken within the prescribed period. The Tribunal also found no reason to interfere with the appellate order granting refund, and rejected the Revenue's contention that the assessee could not claim the benefit of exemption while availing Modvat credit.

Conclusion: The refund was held admissible and the Revenue's appeal failed.

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