Modvat credit reversal on common inputs follows the later circular's pro rata debit procedure for exempted clearances.

Modvat credit reversal on common inputs used for both dutiable and exempted footwear is governed by the later Board circular when it modifies the earlier monthly-return procedure. The later instruction requires debit of credit attributable to exempted clearances before removal of exempted goods, on an actual or pro rata basis, together with the prescribed monthly statement. Because that updated circular was not before the original authority, the earlier basis could not stand without reconsideration, and the matter required fresh decision under the modified procedure.

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Issues: Whether the reversal of Modvat credit on common inputs used in the manufacture of dutiable and exempted footwear was to be governed by the earlier monthly-return procedure or by the later modified Board circular, and whether the matter required fresh consideration.

Analysis: The dispute concerned the method for quantifying credit reversal under the Modvat scheme where common inputs were used for both dutiable and exempted final products. The later Board circular modified the earlier instruction and required debit of credit attributable to exempted clearances before removal of the exempted goods on actual or pro rata basis, along with a monthly statement in the prescribed format. Since the later instructions were not before the original authority when the impugned order was made, the basis adopted below could not be sustained without re-examination in light of the updated circular.

Conclusion: The appeal succeeded and the matter was remanded to the Commissioner for a fresh decision in accordance with the later Board circular.

Ratio Decidendi: Where the governing departmental instruction is modified by a later circular clarifying the procedure for Modvat credit reversal on common inputs, and that later instruction was not considered by the original authority, the matter must be decided afresh under the modified circular.

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