Modvat credit barred for inputs used in export goods under the Value Based Advance Licence Scheme, denying refund claim.

Modvat credit on inputs used in manufacture of export goods was treated as barred where the exports were made under the Value Based Advance Licence Scheme and benefit of Notification No. 203/92-Cus. was claimed. The notification's condition was read as prohibiting any input-stage credit in respect of such export goods, and the clarification relied on did not change that restriction. Modvat credit was therefore inadmissible on the inputs used for those exports, and the refund claimed was not available.

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Issues: Whether Modvat credit on inputs used in the manufacture of export goods was admissible where the exports were made under the Value Based Advance Licence Scheme and the benefit of Notification No. 203/92-Cus. was claimed.

Analysis: The notification required that no input stage credit be obtained in respect of export goods exported under the Value Based Advance Licence Scheme. On a reading of the notification, the condition was treated as prohibiting Modvat credit on inputs used for manufacture of such export goods. The clarification relied on did not alter the effect of the condition in the notification.

Conclusion: Modvat credit was held to be inadmissible on the inputs used for the export goods covered by the scheme, and the assessee was not entitled to the refund claimed.

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