Reversal of Modvat credit preserves exemption eligibility under Notification No. 71/68, following Chandrapur Magnet Wires.

Reversal of Modvat credit on inputs used in manufacturing exempted final products preserved eligibility for exemption under Notification No. 71/68. Applying the principle from Chandrapur Magnet Wires, the Tribunal held that once the credit was reversed, the assessee could still claim the notification benefit. It did not examine marketability on the merits, and the record also showed that the assessee later obtained the same benefit in the Collector's orders on the identical issue.

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Issues: Whether the assessee was entitled to the benefit of Notification No. 71/68 dated 1-4-1968 after reversing the Modvat credit taken on inputs used in the manufacture of the exempted final product.

Analysis: The Tribunal did not go into the merits of marketability. It accepted the assessee's contention on the exemption notification, following the principle settled by the Supreme Court in Chandrapur Magnet Wires that reversal of credit on inputs used in the manufacture of exempted goods preserves eligibility for the notification benefit. The record also showed that the assessee had subsequently obtained the benefit on the same issue from the Collector's orders.

Conclusion: The assessee was entitled to the benefit of Notification No. 71/68 and the appeal succeeded on that issue.

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