Rebate on export clearances allowed where later customs exemption did not bar Modvat credit on inputs.

Rebate under Rule 12(1)(a) was admissible on export clearances of picture tubes made under the DEEC Scheme against VABAL licences issued after 1-4-1995, because the exports were effected under Notification No. 79/95-Cus. and not Notification No. 203/92-Cus. The earlier notification barred input credit, but the later notification exempted basic customs duty only and did not prohibit Modvat credit on inputs. The corresponding circular also clarified that input duty credit could be taken as Modvat credit. Accordingly, there was no legal bar to availing Modvat credit and debiting it for duty on export clearances, and rebate could not be denied by relying on the earlier notification.

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Issues: Whether rebate under Rule 12(1)(a) was admissible on export clearances of picture tubes made under the DEEC Scheme against VABAL licences issued after 1-4-1995, where Modvat credit on inputs had been availed and the goods were exported under Notification No. 79/95-Cus. rather than Notification No. 203/92-Cus.

Analysis: The export clearances were effected in accordance with the procedure under Rule 12(1)(a) of the Central Excise Rules, 1944 and the exports themselves were not in dispute. Notification No. 203/92-Cus. contained a condition barring input credit, but Notification No. 79/95-Cus., issued later under Section 25(1) of the Customs Act, 1962, granted exemption from basic customs duty only and omitted any prohibition against availment of Modvat credit. The corresponding circular clarified that input duty credit could be availed as Modvat credit. In these circumstances, there was no legal bar to using Modvat credit on inputs and debiting it for payment of duty on export clearances, and the earlier notification could not be relied upon to deny rebate where the later and beneficial notification applied.

Conclusion: Rebate was admissible, and the rejection of the rebate claims was not sustainable.

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