Modvat credit on non-duty-paid inputs denied where goods had not suffered duty at receipt despite earlier duty-paid inputs.

Deemed Modvat credit under Rule 57G(2) was treated as dependent on whether the inputs were clearly identifiable as non-duty paid, charged to nil rate, or wholly exempt from duty within the Larger Bench interpretation. The mere fact that the goods had been manufactured earlier from duty-paid inputs did not, by itself, make credit admissible when the goods received at that stage had not suffered duty. On that basis, the credit was correctly disallowed.

---

---

Issues: Whether Modvat credit was admissible on inputs received without payment of duty on the footing that they were manufactured from duty-paid inputs at an earlier stage.

Analysis: The admissibility of deemed Modvat credit under Rule 57G(2) was held to depend on whether the inputs were clearly recognizable as non-duty paid, charged to nil rate of duty, or wholly exempt from duty within the scope explained by the Larger Bench. The Tribunal applied that interpretation and found that the mere fact that the goods were manufactured from duty-paid inputs at an earlier stage did not by itself make the credit admissible when the goods at the point of receipt had not suffered duty. On the facts, the impugned order correctly disallowed the credit.

Conclusion: Modvat credit was not admissible, and the assessee's challenge failed.

---