Modvat credit remains available when exemption is not availed, as earlier Tribunal view stayed operative.

A manufacturer not availing exemption under Notification No. 217/86 may claim Modvat credit on inputs used in the manufacture of final products. The Tribunal relied on its earlier decision in the same assessee's case, and that view remained operative because no stay order was produced. On that basis, the revenue's objection that captively consumed PVC film or sheet was exempt from duty did not displace the credit claim, and the assessee's entitlement to Modvat credit was upheld.

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Issues: Whether a manufacturer who does not avail the duty exemption under Notification No. 217/86 is entitled to take Modvat credit on inputs used in the manufacture of the final products.

Analysis: The impugned order had followed the Tribunal's earlier decision in the respondents' own case, which had accepted the position that a manufacturer choosing not to avail the exemption could still take Modvat credit. The revenue relied on Notification No. 217/86 and contended that the captively consumed PVC film/sheet used in the manufacture of laminated fabric was exempt from duty. However, no order staying the earlier Tribunal decision was produced, and the earlier view remained operative for the dispute before the Tribunal.

Conclusion: The respondents were entitled to avail Modvat credit, and the revenue's challenge failed.

Final Conclusion: The appeal was rejected and the assessee's entitlement to Modvat credit, as upheld in the impugned order, remained undisturbed.

Ratio Decidendi: In the absence of any stay on the earlier decision, a manufacturer opting not to avail an exemption notification may claim Modvat credit on inputs used in manufacture.

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