MODVAT removal of duty-paid inputs requires full examination of job-work rules, notification effect, and marketability of the output.

Permission to remove duty-paid inputs for further processing outside the factory under MODVAT was held to require consideration of Rule 57D, Rule 57F(2) read with Notification No. 214/86, and the marketability of the product emerging at the job worker's end. The authorities had taken a narrow view of Rule 57F(2) without examining whether the article was a marketable excisable commodity or merely an intermediate product. The appellate order was treated as incomplete in law for failure to consider all relevant aspects, and the matter was remanded for fresh adjudication after hearing the appellant.

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Issues: Whether permission under Rule 57F(2) could be denied without examining the scheme of Rule 57D, Rule 57F(2) read with Notification No. 214/86, and the marketability of the product emerging at the job worker's end.

Analysis: The appellant sought removal of duty-paid inputs after partial processing for further processing outside the factory in the course of manufacture of wire mesh. The authorities below proceeded on a narrow view of Rule 57F(2) and did not consider the overall MODVAT scheme, including the effect of Notification No. 214/86 and the question whether the article emerging at the job worker's premises was a marketable excisable commodity or only an intermediate product. The appellate order was therefore found to be incomplete in law for failure to examine the matter in all its relevant aspects.

Conclusion: The impugned order was set aside and the matter was remanded for fresh adjudication after hearing the appellant.

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