Modvat credit on inputs exported under bond remains admissible where the rules do not prohibit utilisation.

Modvat credit was discussed in the context of inputs cleared for export under bond, with the Tribunal noting that the classification and declarations treated the goods as excisable inputs and that the department had accepted the classification. The governing rules were read as containing no restriction that denied credit merely because the input itself was exported under bond. The Tribunal also relied on the Board's clarification that such credit could be utilised in the same manner as for a final product, and found no sufficient basis to disturb the appellate order. The departmental challenge therefore failed, and the assessee's entitlement to credit was sustained.

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Issues: Whether Modvat credit was admissible in respect of inputs cleared for export under bond, and whether the departmental challenge to the Collector (Appeals) order could succeed.

Analysis: The dispute concerned Cresyl Titanate cleared by the assessee after testing and repacking, with credit having been taken on the input under the Modvat scheme. The Tribunal noted that the declarations and classification list treated the goods as excisable input and that the department had accepted the relevant classification. It further held that the governing rules did not impose a restriction on utilisation of credit merely because the input was exported under bond. The Tribunal also accepted the Board's clarification that Modvat credit in respect of inputs exported under bond could be utilised in the same manner as for a final product, and that the department had not shown any sufficient ground to disturb the appellate order.

Conclusion: Modvat credit on inputs exported under bond was held admissible, and the departmental appeal failed.

Final Conclusion: The appellate order allowing the assessee's claim was sustained, and the department's challenge was rejected.

Ratio Decidendi: Where inputs are exported under bond and the relevant Modvat rules do not prohibit utilisation of credit in such a situation, credit cannot be denied merely because the input itself, rather than the final product, is cleared for export under bond.

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