Deemed Modvat credit under Rule 57B may remain available despite a later notification if earlier exempt clearances still satisfy the rule.

Rule 57B on deemed Modvat credit was examined in relation to inputs cleared under an exemption notification granting partial duty relief or relief linked to clearances. The text states that the goods were cleared on payment of duty under a notification covered by the rule, and that the later force of Notification No. 1/93 at the time of receipt of the inputs did not by itself justify denial of the credit. It further notes that the earlier clearances under Notification No. 175/86 continued to satisfy the conditions for the credit contemplated by the rule, and the Revenue's objection was accepted.

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Issues: Whether the assessee was entitled to higher notional/deemed Modvat credit under Rule 57B when the goods were received after the coming into force of Notification No. 1/93, notwithstanding that the earlier Notification No. 175/86 had expressly provided for such benefit.

Analysis: Rule 57B contemplates deemed Modvat credit where inputs are cleared under an exemption notification granting partial exemption from duty or exemption linked to the value of clearances. The goods in question had been cleared on payment of duty under a notification covered by the rule, and no legal basis was shown to deny the benefit merely because Notification No. 1/93 was in force on the date of receipt of the inputs. The earlier clearances under Notification No. 175/86 continued to satisfy the conditions for the credit envisaged by the rule.

Conclusion: The assessee was not entitled to succeed on the question referred, and the Revenue's objection was accepted.

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