Similar goods test under Modvat credit allowed duty payment on home-consumed bulk drugs after export under bond.

Bulk drugs exported under bond and the corresponding bulk drug cleared for home consumption were treated as similar goods for utilisation of Modvat credit under Rule 57F(3) of the Central Excise Rules, 1944. The rule permits accumulated credit to be applied against duty on a final product similar to exported goods. Because the goods fell within the same tariff chapters, were all antibiotics, and shared common inputs, they were found to have sufficient general likeness despite not being identical. On that basis, the earlier view against such utilisation was held inapplicable, and credit could validly be used for duty on the home-consumed product.

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Issues: Whether the bulk drugs exported under bond and the bulk drug cleared for home consumption were similar goods for the purpose of utilisation of Modvat credit under Rule 57F(3) of the Central Excise Rules, 1944.

Analysis: Rule 57F(3) permits utilisation of accumulated Modvat credit towards duty on a final product similar to exported goods. The bulk drugs in question fell under the same tariff chapters, were all antibiotics, and shared common inputs. Applying the settled meaning of "similar" as not identical but corresponding or resembling in many respects, the goods were found to have the requisite general likeness. The earlier view that credit could not be so utilised was held inapplicable on these facts.

Conclusion: The bulk drugs were similar goods, and the Modvat credit could validly be utilised for duty payment on the home-consumed product; the assessee succeeded on this issue.

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