Modvat credit procedure for job-worker clearances under Rule 57F remained undecided as substantial legal questions were framed.

Modvat credit on processed inputs or intermediate products cleared by a job worker was examined under the erstwhile Rule 57F(2) and Rule 57F(3) of the Central Excise Rules, 1944, along with whether the prescribed procedure had to be followed in full and whether an assessee adopting that procedure could depart from it. The appeal was admitted and substantial questions of law were framed, but there was no final adjudication on the merits of these issues.

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Issues: Whether Modvat credit was admissible on processed input or intermediate products cleared by a job worker under the erstwhile Rule 57F(2) and Rule 57F(3) of the Central Excise Rules, 1944; whether the procedure under those rules had to be followed in totality; and whether an assessee who adopts that procedure can deviate from it.

Outcome: The appeal was admitted and substantial questions of law were framed. No final adjudication on the merits of the issues was made.

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