Modvat credit on exported medicines turned on export evidence and classification, with remand ordered for fresh adjudication.

Modvat credit for exported P and P medicines could not be denied merely on the basis that the goods might have been exempt under Notification No. 1/93, because that notification was treated as applying to clearances for home consumption and not to exports. The Tribunal also noted that the export documents supported classification of the goods as P and P medicines under Heading 3003.10, making the factual position uncertain. As the evidence on export and classification required closer examination, the matter was remanded to the original authority for fresh adjudication after giving both sides an opportunity to be heard.

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Issues: Whether the appellant was entitled to Modvat credit in respect of P and P medicines exported to Sri Lanka, and whether the matter required remand for fresh consideration of the export evidence and classification of the goods.

Analysis: The denial of Modvat credit rested on the view that the goods exported would have been eligible for exemption under Notification No. 1/93 and, therefore, hit by Rule 57C of the Central Excise Rules, 1944. That reasoning was not accepted because the notification was held to apply to goods cleared for home consumption and not to exported goods. The factual basis of the appellate finding was also found to be doubtful, since the statutory export documents produced before the Tribunal supported the claim that the goods exported were P and P medicines classifiable under Heading 3003.10. In view of the disputed factual position, and after scrutiny of the documents by the departmental representative, the Tribunal found that the issue had to be reconsidered by the original authority after giving both sides an opportunity.

Conclusion: The denial of Modvat credit was set aside and the matter was remanded for fresh adjudication on the appellant's claim relating to export of P and P medicines.

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