Modvat credit on molasses could be used to pay duty on sugar under Rule 57F(12), despite different input use.

Modvat credit taken on molasses could be utilised to pay duty on sugar under the proviso to Rule 57F(12), even though molasses was not an input for sugar. The Tribunal read the provision in the context of the Modvat scheme and accepted that the non obstante clause and the proviso permitted use of the credit in the manner claimed. The ruling confirms that credit under Rule 57F(12) may be applied to the final product despite the input on which credit was earned not being the same input for that product.

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Issues: Whether Modvat credit availed on molasses could be utilised towards payment of duty on sugar under the proviso to Rule 57F(12), even though molasses was not an input for sugar.

Analysis: The Tribunal noted the prior decisions relied upon by the assessee and considered the departmental objection based on the language of Rule 57F(12), including the contention that the non obstante clause referred only to Rule 57A. After considering the earlier Tribunal orders and the relevant scheme of Modvat credit, the Tribunal accepted the assessee's entitlement to use the credit in the manner claimed.

Conclusion: The issue was decided in favour of the assessee, and the Modvat credit was held to be available for payment of duty on sugar.

Ratio Decidendi: Credit under the proviso to Rule 57F(12) could be utilised for payment of duty on the final product notwithstanding that the material on which credit was taken was not itself an input for that product.

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