Modvat refund on exported inputs sustained where records were maintained and no opt-out from the scheme was shown.

Rule 57F(13) allows Modvat credit on inputs used in exported final products and permits refund where credit cannot be adjusted, subject to prescribed safeguards. The analysis notes that the manufacturer had produced RG 23A Part I and related records before the Assistant Commissioner, supporting maintenance of input accounts and prior sanction of refund for an earlier quarter. It also found no material showing that the manufacturer had opted out of the Modvat scheme for the exported product, and the fact that another product was cleared under SSI exemption did not by itself defeat the claim. On that basis, denial of refund for alleged procedural non-compliance was not sustainable.

---

---

Issues: Whether refund of Modvat credit of duty paid on inputs used in the manufacture of goods exported under bond was admissible under Rule 57F(13) of the Central Excise Rules, 1944.

Analysis: Rule 57F(13) permits utilization of credit on inputs used in exported final products and, where adjustment is not possible, refund subject to the prescribed safeguards and conditions. The record showed that the manufacturer had produced RG 23A Part I register and other documents before the Assistant Commissioner when refund for the earlier quarter was sanctioned, which supported the finding that the input records were maintained. No material was brought on record to establish that the manufacturer had opted out of the Modvat scheme in respect of the exported product or that it was otherwise disentitled to the benefit merely because another product was cleared under SSI exemption. In these circumstances, the denial of refund on the ground of non-compliance with the Modvat procedure could not be sustained.

Conclusion: The refund of Modvat credit was admissible and the impugned order was liable to be set aside in favour of the assessee.

---