Modvat credit reversal without utilisation does not defeat exemption where no actual benefit was taken.

Mere temporary taking of Modvat credit under Rule 57Q, followed by reversal without utilisation, did not amount to "availing" credit where the exemption notification denied benefit only if credit under Rules 57A or 57Q had been availed. The condition was read as aimed at preventing double benefit through both exemption and input credit, not at penalising unutilised or reversed credit entries. On that basis, entitlement to the concessional rate under Notification No. 4/97-C.E. was preserved, and the demand and penalty were set aside.

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Issues: Whether the assessee was disentitled to the concessional rate of duty under Notification No. 4/97-C.E. merely because Modvat credit under Rule 57Q was initially taken but later reversed without utilisation.

Analysis: The condition in the notification required that credit under Rule 57A and Rule 57Q of the Central Excise Rules, 1944 should not have been availed. The credit taken by the assessee remained unutilised and was subsequently reversed. The expression "avail" was understood to mean taking advantage of or utilising the credit. Since the assessee had not derived any benefit from the credit, the condition of non-availment was treated as satisfied. The object of the notification condition was only to prevent double benefit of exemption and input credit.

Conclusion: The denial of exemption was unsustainable and the assessee remained entitled to the benefit of the notification.

Final Conclusion: The demand and penalty were set aside and the appeal succeeded with consequential relief.

Ratio Decidendi: Where a notification denies exemption only if credit has been availed, mere temporary taking of credit without utilisation, followed by reversal, does not amount to availing the credit.

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