Rule 191BB procedure and Modvat credit: verification was allowed, and credit was not barred under Rule 57C.

Verification of compliance with Rule 191BB before granting refund was treated as an ancillary check and not as travel beyond the show cause notice or jurisdiction. On the Modvat issue, the Tribunal applied its earlier ruling and held that Rule 57C did not bar credit on inputs used in goods cleared under the special procedure of Notification No. 33/90-C.E. (N.T.) issued under Rule 191BB. The procedure for movement of goods without duty governed the case, so Modvat credit remained admissible where the prescribed Rule 191BB requirements were followed.

---

---

Issues: (i) whether the direction to the Assistant Commissioner to verify compliance with Rule 191BB of the Central Excise Rules, 1944 before refund could be said to travel beyond the show cause notice or jurisdiction; and (ii) whether Rule 57C of the Central Excise Rules, 1944 barred Modvat credit on inputs used in the manufacture of final products cleared under Notification No. 33/90-C.E. (N.T.) dated 5-9-1990 issued under Rule 191BB of the Central Excise Rules, 1944.

Issue (i): whether the direction to the Assistant Commissioner to verify compliance with Rule 191BB of the Central Excise Rules, 1944 before refund could be said to travel beyond the show cause notice or jurisdiction.

Analysis: The direction was only to ensure that the credit procedure relied upon for granting relief had in fact been followed at the consignor's and consignee's ends. Such a verification direction was ancillary to the grant of refund and did not alter the basic controversy or introduce a new case beyond the notice.

Conclusion: The direction did not travel beyond jurisdiction and the assessee's appeal on this point failed.

Issue (ii): whether Rule 57C of the Central Excise Rules, 1944 barred Modvat credit on inputs used in the manufacture of final products cleared under Notification No. 33/90-C.E. (N.T.) dated 5-9-1990 issued under Rule 191BB of the Central Excise Rules, 1944.

Analysis: The Tribunal followed its earlier final order on the identical issue and held that the credit was admissible where the goods moved under the Rule 191BB procedure. Rule 57C was held not to govern such cases, and the exemption notification was treated as operating within the special procedure applicable to the movement of intermediate goods without payment of duty.

Conclusion: Modvat credit was held admissible and the departmental appeal failed.

Final Conclusion: The common order sustained the procedural direction for verification, while affirming admissibility of Modvat credit on the merits, resulting in rejection of both appeals with the substantive relief going to the assessee.

Ratio Decidendi: Where goods are cleared under the special procedure of Rule 191BB of the Central Excise Rules, 1944, Rule 57C of the Central Excise Rules, 1944 does not by itself disallow Modvat credit if the prescribed procedure is followed.

---