MODVAT/CENVAT credit unavailable for bought-out goods exported as such, and limitation could not be reopened on remand.

MODVAT/CENVAT credit was discussed as being unavailable for duty-paid bought-out machinery, components and assemblies exported as such with a sugar plant, because the scheme requires use of inputs or capital goods in the assessee's factory in the manufacture of the final product. The goods were not used or unpacked in the factory, so export of the complete plant did not satisfy the statutory condition. The text also states that a time-bar plea could not be reopened in remand proceedings, as the earlier appellate order had already been carried further and the remand was confined to quantification and verification. The stated result was that the credit claim and limitation plea failed.

---

---

Issues: (i) Whether MODVAT/CENVAT credit was admissible on bought-out items exported as such along with machinery for a sugar plant installed abroad; (ii) whether the plea of time-bar could be reopened in the remand proceedings.

Issue (i): Whether MODVAT/CENVAT credit was admissible on bought-out items exported as such along with machinery for a sugar plant installed abroad.

Analysis: Credit under the MODVAT scheme was available only where duty-paid inputs or capital goods were used in the assessee's factory in the manufacture of the final product. The bought-out machinery, components and assemblies were not used or even unpacked in the appellant's factory and were exported in the same condition in which they were received. The issue had already been examined on merits in the appellant's own case and the earlier view that such goods were not eligible for credit had been affirmed. The fact that the entire plant was ultimately exported did not alter the statutory requirement of use in manufacture within the factory.

Conclusion: MODVAT/CENVAT credit on the bought-out items was not admissible and the finding was against the assessee.

Issue (ii): Whether the plea of time-bar could be reopened in the remand proceedings.

Analysis: The earlier Tribunal order had been carried to the Supreme Court and the later remand order proceeded on a limited footing confined to quantification and related verification. In that setting, the time-bar plea was treated as not available for fresh adjudication at the stage of remand. The prior appellate structure and merger of the earlier order foreclosed reopening of that issue in these proceedings.

Conclusion: The time-bar plea was rejected and was against the assessee.

Final Conclusion: The appeals failed in full, with the impugned demands and connected consequences sustained on the settled position that credit was unavailable on such traded goods and the remand could not be used to reopen limitation.

Ratio Decidendi: MODVAT/CENVAT credit cannot be claimed on duty-paid goods that are merely purchased and exported as such without being used in the assessee's factory in the manufacture of the final product.

---