Modvat credit and exemption can coexist for different products where the schemes apply to separate goods.

Modvat credit and full exemption under Notification No. 1/93-CE can be claimed simultaneously where they relate to different products. The Tribunal applied its earlier view, treated as affirmed by the Supreme Court, that the two benefits are not mutually exclusive in such a situation. Because the assessee used Modvat credit for some cleared goods and claimed exemption without credit for other distinct goods, the arrangement was consistent with the settled position. The assessee's appeal succeeded on that basis.

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Issues: Whether Modvat credit on inputs used in some products and full exemption under Notification No. 1/93-CE for different products could be availed simultaneously.

Analysis: The Tribunal followed its earlier decision, which had been relied upon as having been upheld by the Supreme Court, and applied the principle that Modvat credit and exemption under a notification are not mutually exclusive where they relate to different products. Since the assessee was clearing some goods on duty with Modvat credit and claiming exemption for other distinct goods without credit, the claim was consistent with the settled approach.

Conclusion: Simultaneous availment of Modvat credit and exemption under the notification for different products was permissible, and the assessee's appeal succeeded.

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