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Issues: Whether refund of accumulated Modvat credit on inputs used in manufacture of exported goods was allowable, and whether credit earned in a subsequent period could be required to be reversed after the lapse provision.
Analysis: Rule 57F(4) and Rule 57F(13) permitted cash refund of outstanding Modvat credit relatable to inputs used in the production of export goods. The exports in question had taken place in 1996, so the relevant credit for refund purposes was the credit earned during that period. The Board's clarificatory letter dated 12.12.97 also supported that the refund mechanism applied to pre-1.3.97 credit and did not justify treating the relevant export-related credit as having lapsed merely because of the later operation of Rule 57F(17). On that basis, there was no justification for denying the refund or for insisting upon reversal of credit earned on inputs purchased in a subsequent period.
Conclusion: The refund was payable and the Revenue's challenge to the order allowing it failed.
Ratio Decidendi: Refund of Modvat credit on inputs used for exported goods must be determined with reference to the credit attributable to the period in which the export goods were manufactured and exported, and subsequent credit cannot be denied or reversed merely because a later lapse provision took effect.
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