Deemed Modvat credit on re-rollable material allowed for M.S. ingots, but denied on mis-rolls made from credited inputs.

A later Government order granting deemed Modvat credit on re-rollable material was treated as prevailing because it did not repeat the earlier exception for inputs clearly recognisable as non-duty paid. On that basis, credit was admissible on M.S. ingots stock covered by the 01-03-1994 order, and denial on the non-duty-paid ground was not sustainable. Credit was not admissible on mis-rolls, however, because they were manufactured from re-rollable material on which credit had already been allowed, so further credit would amount to duplication. The appeal was therefore only partly allowed, with relief confined to M.S. ingots.

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Issues: Whether deemed Modvat credit under the Government of India order dated 01-03-1994 was admissible on M.S. ingots and mis-rolls, and whether credit could be denied on the ground that the inputs were clearly recognisable as non-duty paid.

Analysis: The relevant circular and earlier Government orders were noted to contain a stipulation denying credit where inputs were clearly recognisable as being non-duty paid. However, the Government of India order dated 01-03-1994 contained no such stipulation; it treated re-rollable material lying in stock on or after 01-04-1994 as deemed duty paid and eligible for credit. The earlier Larger Bench decision was distinguished because it dealt with earlier orders that expressly contained the non-duty-paid exception. On that basis, deemed credit was held admissible on M.S. ingots. Mis-rolls, however, were found to have been produced out of re-rollable material on which credit was already allowed, and credit on such mis-rolls was therefore not admissible.

Conclusion: Deemed Modvat credit was admissible on M.S. ingots, but not admissible on mis-rolls.

Final Conclusion: The denial of deemed Modvat credit was set aside for M.S. ingots and sustained for mis-rolls, resulting in a partial allowance of the appeal with consequential relief.

Ratio Decidendi: Where a later Government order granting deemed credit does not contain the earlier express exception for inputs clearly recognisable as non-duty paid, credit cannot be denied on that ground; but credit is not available again on products manufactured out of inputs on which such credit has already been allowed.

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