Retrospective exemption denied for deemed export claims, and Modvat credit was refused on pre-notification clearances.

Notification No. 4/92, effective from 1-3-1992, was held not to operate retrospectively so as to treat earlier clearances to a 100% Export Oriented Unit as deemed export for Modvat credit. Because the clearances preceded the notification and no express retrospective effect was provided, the benefit could not be extended to those transactions. The assessee was therefore not entitled to Modvat credit on the disputed clearances, and the departmental appeal succeeded with the lower appellate order set aside.

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Issues: Whether Notification No. 4/92 dated 1-3-1992 could be applied retrospectively to treat clearances made to a 100% Export Oriented Unit as deemed export for granting Modvat credit.

Analysis: The relevant notification came into force only from 1-3-1992. The clearances in question were made prior to that date. In the absence of any express retrospective effect, the notification could not be extended backwards to confer the benefit of Modvat credit on earlier transactions treated as deemed export.

Conclusion: The retrospective application of the notification was rejected, and the assessee was held not entitled to Modvat credit on the clearances in question.

Final Conclusion: The departmental appeal succeeded and the order of the lower appellate authority was set aside.

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