Deemed Modvat credit unavailable for nil-rate inputs, as later materials did not override the governing Rule 57G(2) order.

Deemed Modvat credit under Rule 57G(2) was unavailable where the inputs had been cleared at nil rate of duty. The availability of the credit depended on the relevant Government of India order issued under Rule 57G(2), and the Tribunal applied the Larger Bench ratio holding that such credit could not be extended to inputs that were admittedly non-duty-paid because of nil-rate clearance. A later order and letter were treated as inapplicable because they were either distinguishable on their terms or not issued under Rule 57G(2). The disallowance of deemed credit was therefore upheld.

---

---

Issues: Whether deemed Modvat credit was admissible under Rule 57G(2) when the inputs were admittedly cleared at nil rate of duty.

Analysis: The benefit of deemed credit depended on the Government of India order issued under Rule 57G(2). The order relevant to the appeal was the one considered by the Larger Bench, and the Tribunal held that where the inputs had been cleared at nil rate of duty, the ratio of the Larger Bench decision denying deemed credit applied. The relied upon later order and letter did not govern the present claim, as they were either distinguishable on their terms or not issued under Rule 57G(2). Since the inputs were admittedly non-duty-paid by reason of nil rate clearance, the credit could not be extended.

Conclusion: Deemed Modvat credit was not admissible and the disallowance was upheld.

---