Exemption for winding wires made from duty-paid inputs upheld where no Modvat credit was taken on the wire rods.

Winding wires manufactured from duty-paid copper wire rods qualified for exemption under Notification No. 69/86 where the notification required duty-paid inputs on which no Modvat credit had been availed. The earlier taking of Modvat credit on copper wire bars, later utilised for payment of duty on the wire rods, did not defeat the exemption because no credit was taken on the wire rods themselves. The notification condition was therefore satisfied, and the Revenue's objection failed.

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Issues: Whether the respondents were entitled to exemption for winding wires under Notification No. 69/86 when the wire rods used in their manufacture had suffered duty and no Modvat credit had been taken on such wire rods.

Analysis: The respondents manufactured winding wires from copper wire rods on which duty had been paid. The relevant exemption required that the winding wires be manufactured from specified inputs on which duty had been discharged and in respect of which no Modvat credit had been availed. The fact that Modvat credit had earlier been taken on copper wire bars and utilised for payment of duty on the wire rods did not defeat the exemption, because the wire rods themselves were duty-paid and no credit was taken on them. The condition of the notification was therefore satisfied.

Conclusion: The exemption under Notification No. 69/86 was available to the respondents, and the Revenue's objection was rejected.

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