Modvat credit utilisation allowed without one-to-one input correlation; export goods under bond did not bar credit use.

Notification No. 225/86 did not impose any express or implied requirement that credit linked to a particular lot of duty-paid inputs be used only for final products manufactured from that same lot. The absence of one-to-one correlation between inputs and finished goods therefore did not defeat utilisation of accumulated credit. Goods cleared for export under bond were also neither exempted goods nor goods chargeable at nil rate, so credit attributable to inputs used in their manufacture could not be denied for use against the final product. The assessee was thus entitled to utilise the entire accumulated credit for payment of duty on the final product.

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Issues: Whether, under Notification No. 225/86, the accumulated credit of duty paid on inputs could be utilised for clearance of the final product without insisting on one-to-one correlation between specific inputs and the finished goods, and whether credit relatable to goods exported under bond could also be so utilised.

Analysis: The Tribunal held that Notification No. 225/86 contained no express or implied condition requiring the exemption equivalent to duty paid on a particular lot of inputs to be used only for payment of duty on final products manufactured from that very lot. The absence of one-to-one correlation did not defeat the benefit of the notification. It was also held that goods cleared for export under bond are neither exempted goods nor goods chargeable to nil rate of duty, and the accumulated credit attributable to inputs used in such manufacture could not be denied for utilisation on the same final product.

Conclusion: The assessee was entitled to utilise the entire accumulated credit for payment of duty on the final product, and denial of utilisation merely because of absence of one-to-one correlation or because some finished goods were exported under bond was not justified.

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