Modvat credit on export-related duty-free clearances held not barred; no referable question of law survived for reference.

Clearances without payment of duty under Rule 191B or Rule 191BB were treated as export-related removals and not as goods wholly exempt from duty or chargeable at nil rate, so the Modvat credit bar in Rule 57C did not apply. On that basis, the Tribunal's view allowing credit was not erroneous, and no substantial or referable question of law survived for a reference under Section 35H. The request for a direction to refer the questions was therefore rejected.

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Issues: Whether Modvat credit on inputs was required to be reversed when the final products were cleared without payment of duty under Rule 191B/Rule 191BB of the Central Excise Rules, 1944, and whether any referable question of law arose for directing a reference under Section 35H of the Central Excise Act.

Analysis: The Court noted that the controversy had already been considered by another High Court, which had held that goods cleared without payment of duty under the export-related provisions were not the same as goods wholly exempt from duty or chargeable at nil rate, and therefore Rule 57C was not attracted. Accepting that view, the Court held that the Tribunal's approach in allowing Modvat credit could not be treated as erroneous. In consequence, no substantial or referable question of law survived for a reference.

Conclusion: The request for a direction to the Tribunal to refer the questions was rejected, and the petitioner failed on the merits of the reference issue.

Final Conclusion: The judgment affirms that clearances under Rule 191B/Rule 191BB do not, by themselves, attract the embargo in Rule 57C, and a reference is not warranted where the Tribunal's view is supported by precedent.

Ratio Decidendi: Goods cleared without payment of duty under export-related removal provisions are not necessarily goods wholly exempt from duty or chargeable at nil rate, so the Modvat credit bar in Rule 57C does not apply and no referable question of law arises when that view is followed by the Tribunal.

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