Modvat credit under Notification No. 177/86-C.E. raised a referable question of law on the scope of the proviso.

Interpretation of the proviso to Notification No. 177/86-C.E. concerning Modvat credit on inputs received from a 100% export-oriented undertaking was treated as raising a referable question of law. The Tribunal noted that the proviso was capable of more than one reasonable construction and that no binding High Court or Supreme Court authority settled the point, including whether credit was confined to the countervailing duty actually paid by the undertaking. On that basis, the interpretative controversy was held to require authoritative determination, and the formulated question was referred to the High Court.

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Issues: Whether the interpretation of Rule 57A read with Notification No. 177/86-C.E. raised a question of law warranting reference to the High Court.

Analysis: The application sought reference on the scope of the proviso to Notification No. 177/86-C.E., particularly whether Modvat credit in respect of inputs received from a 100% export-oriented undertaking was confined to the countervailing duty actually paid by that undertaking. The Tribunal noted that the proviso was capable of more than one interpretation, that the point involved interpretation of a notification, and that no binding High Court or Supreme Court decision on the clause was available. On that basis, the matter was treated as raising an important question requiring authoritative pronouncement.

Conclusion: The question of law was referred to the High Court.

Final Conclusion: The proceeding ended with a reference of the formulated question to the Delhi High Court for consideration.

Ratio Decidendi: Where a statutory notification is reasonably capable of competing interpretations and the issue is not settled by binding precedent, the interpretative controversy itself constitutes a referable question of law.

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