Modvat credit refund on exports under bond cannot be denied for merchant export or minor procedural defects.

Refund of unutilised Modvat credit under Rule 57F(3) was treated as admissible where duty-paid inputs were used in goods exported under bond, even if export was effected through a merchant exporter. The proviso was read as requiring export under bond, not personal export by the manufacturer, and procedural objections such as multiple claims in a quarter could not defeat substantive entitlement. Grounds not raised in the show cause notice were not permitted to be added later, and the appellate jurisdiction objection failed because the dispute concerned refund of Modvat credit, not rebate of duty.

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Issues: Whether refund of Modvat credit under Rule 57F(3) was admissible when the goods were exported under bond through a merchant exporter, and whether procedural objections or new appellate grounds could defeat the refund claim.

Analysis: The goods were manufactured by the respondents, the inputs were duty paid, and the final products were exported under bond. The language of the proviso to Rule 57F(3) requires export of the products under bond and does not insist that the manufacturer must personally export the goods. The Revenue could not deny the claim on grounds not taken in the show cause notice, and the filing of two claims in a quarter was treated as a procedural matter that could not defeat the substantive entitlement. The Tribunal also held that the dispute concerned refund of Modvat credit and not rebate of duty, so the appellate jurisdiction objection under Section 35B(1) did not apply.

Conclusion: The refund of Modvat credit was admissible and the Revenue's appeal had no merit.

Ratio Decidendi: Where final products are cleared for export under bond, refund of unutilised Modvat credit cannot be denied merely because the export was effected through a merchant exporter or because of procedural irregularities, so long as the substantive conditions of the rule are met.

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