Modvat credit on repaired materials allowed despite duty paid on exempted goods, with precedent and circulars supporting eligibility.

Modvat credit was held admissible on repaired materials even though the supplier had paid duty on exempted goods, because prior Tribunal precedent had already settled the entitlement and the Board circulars relied on by the Department had been considered in that line of authority. The order allowing credit was found to disclose no irregularity or illegality, and the departmental challenge therefore failed.

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Issues: Whether the receiver of repaired materials was entitled to Modvat credit where duty had been paid by the supplier on exempted goods.

Analysis: The entitlement to Modvat credit was treated as settled by prior Tribunal decisions, including the cited line of authority, and the Board circulars relied upon by the Department had already been considered in that context. The order allowing credit was found to suffer from no irregularity or illegality.

Conclusion: The receiver was entitled to Modvat credit even though the supplier had paid duty on exempted goods; the departmental appeal failed.

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