Modvat credit claims under Rule 57H(2) must be decided on merits by the competent authority, not barred by an earlier direction.

Rule 57H(2) of the Central Excise Rules, 1944 provided a distinct statutory route for Modvat credit in specified contingencies, and the Assistant Collector was the competent authority to decide such a request on merits. A Superintendent's direction to reverse credit, not being an order under Rule 57H(2), could not extinguish the assessee's right to seek relief under that provision. Where an application is made to the proper authority and an appeal lies from that decision, the appellate authority must examine the merits of the statutory claim rather than treat it as foreclosed by the earlier direction.

---

---

Issues: Whether the appellant's request for Modvat credit under Rule 57H(2) of the Central Excise Rules, 1944 was required to be examined on merits by the competent authority and whether the Collector (Appeals) was correct in treating the matter as barred by the earlier Superintendent's direction.

Analysis: Rule 57H(2) provided a distinct statutory avenue for claiming Modvat credit in specified contingencies, and the Assistant Collector was the competent authority to decide that request. The Superintendent's direction to reverse the credit was not an order passed under Rule 57H(2), and it could not extinguish the appellant's statutory right to seek relief under that rule. Since the appellant had applied to the competent authority and an appeal lay from that order, the appellate authority was required to examine the merits of the Assistant Collector's decision rather than treat the matter as concluded by the Superintendent's earlier direction.

Conclusion: The Collector (Appeals)'s order was not maintainable in law and was set aside.

---