Modvat credit reversal preserves wire exemption and excludes exempt clearances from aggregate value computation.

Reversal of Modvat credit on duty-paid wire rods was treated as sufficient compliance with the condition in Notification No. 208/83-C.E. that no credit be taken, because the credit entry stood deleted before removal of the final wires. On that basis, galvanised iron wires and metal steel wires made from duty-paid wire rods remained eligible for the exemption, and their clearance value could not be included in the aggregate value for exemption under Notification No. 175/86-C.E.

---

---

Issues: Whether reversal of Modvat credit on duty-paid wire rods entitled the assessee to exemption for the final wires under Notification No. 208/83-C.E. and to exclusion of their clearance value from the aggregate value for exemption under Notification No. 175/86-C.E.

Analysis: The exemption under Notification No. 208/83-C.E. applied to galvanised iron wires and metal steel wires made from duty-paid wire rods, subject to no credit being taken under Rule 56A or Rule 57A of the Central Excise Rules, 1944. The Tribunal applied the principle that, if the assessee reverses the credit before removal of the exempted final product, the credit entry stands deleted and the condition against availment of credit is satisfied. Once the final product is treated as exempt, its clearance value cannot be included for the aggregate clearance calculation under Notification No. 175/86-C.E.

Conclusion: Reversal of the Modvat credit preserved the exemption, and the clearance value of the wires was not includible for Notification No. 175/86-C.E.; the issue was decided in favour of the assessee.

---