Modvat credit cannot bar export rebate solely because duty was paid through RG 23C credit.

Delay in filing the revision was condoned because the rejection of rebate had been made by a non-speaking letter without observance of natural justice, and the applicants showed sufficient cause for the late filing. Rebate on exported goods could not be denied merely because duty had been discharged through RG 23C credit under the Modvat scheme, since the credit registers operated as permissible duty credit accounts and the relevant rules allowed utilisation of capital goods credit towards duty on final products. The revision was allowed with consequential relief, while the rebate claim remained subject to examination on merits and in accordance with law.

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Issues: (i) Whether the delay in filing the revision was liable to be condoned; (ii) Whether rebate could be denied merely because duty on exported goods was paid through RG 23C credit relating to capital goods.

Issue (i): Whether the delay in filing the revision was liable to be condoned.

Analysis: The order rejecting rebate was issued by letter and not as a speaking order after observance of the principles of natural justice. The applicants had also shown sufficient cause for the belated filing by explaining the forwarding of appeal papers to the earlier appellate office address.

Conclusion: The delay in filing the revision was condoned, in favour of the assessee.

Issue (ii): Whether rebate could be denied merely because duty on exported goods was paid through RG 23C credit relating to capital goods.

Analysis: RG 23A credit under Rule 57G of the Central Excise Rules, 1994 and RG 23C credit under Rule 57T of the Central Excise Rules, 1994 were treated as accounts for duty credit under the Modvat scheme. Rule 57S permitted utilisation of credit on capital goods towards payment of duty on final products, and the departmental circular indicated that rebate could be sanctioned where export duty had been discharged through such credit debits.

Conclusion: Rebate was not barred merely because the duty was paid through RG 23C credit, in favour of the assessee.

Final Conclusion: The revision was allowed with consequential relief, leaving the rebate claim to be examined for correctness on the merits and in accordance with law.

Ratio Decidendi: Where duty on exported goods is validly paid through permissible credit under the Modvat scheme, rebate cannot be denied on the sole ground that the payment was made from RG 23C rather than RG 23A credit, and a non-speaking rejection order will justify condonation of delay when natural justice is not observed.

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