Modvat credit on inputs for export under bond remained available where the replenishment scheme did not exclude it.

Modvat credit on inputs used to manufacture goods exported under bond was examined in the context of replenishment materials under the advance licence scheme. The text distinguishes Modvat credit under the Central Excise Rules, 1944 from customs duty liability under the Customs Act, and notes that the relevant notification did not import Modvat restrictions merely because the finished goods were exported under bond. The earlier Tribunal view on Rule 57F(3) was treated as correct, and no contrary point of law was shown. On that basis, the credit was not treated as inadmissible on the stated ground.

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Issues: Whether the credit of duty paid on inputs used in the manufacture of goods exported under bond, where the export was linked to replenishment materials under the advance licence scheme, was recoverable or disallowable under the Central Excise Rules, 1944.

Analysis: The issue turned on the distinction between Modvat credit under the Central Excise Rules and customs duty liability under the Customs Act. The notification governing the replenishment scheme did not incorporate the Modvat provisions so as to deny credit merely because the resultant products were exported under bond. The earlier view taken by the Tribunal on the applicability of Rule 57F(3) was found to be correct, and no contrary point of law was shown to arise.

Conclusion: The credit was not held to be inadmissible on the stated ground, and the reference application failed.

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