2003 (11) TMI 268 - AT - Central Excise

Disallowance of Modvat credit u/r 57-I of Central Excise Rules 1944 for pharmaceutical products - Inputs - HELD THAT - On a careful consideration of the submissions and on examining the cited case-law in the case of Norris Medicines Ltd. v. CCE C 2002 (11) TMI 783 - CESTAT MUMBAI it is seen that the judgment is identical to fact of the case. The Bombay Bench in the above case has allowed the assessee s claim and held that once the export has been made under bond then modvat credit cannot be denied. Respectfully following the ratio of the above noted judgment the impugned order is set aside and appeal allowed with consequential relief if any as per law.

Summary

Issues involved: Appeal against disallowance of Modvat credit u/r 57-I of Central Excise Rules, 1944 for pharmaceutical products classified under Chapter 30 of Central Excise Tariff Act, 1985.

1. The appellant contested the disallowance of Modvat credit by the lower authority under Rule 57-I, claiming that even if the final product is exempted, credit availed cannot be denied if duty was paid on the final product. They argued that the product was classified as a P or P Medicine and that the Modvat credit should not be denied for exported goods. The appellant also highlighted that Rule 57-I should apply only in cases of error, omission, or misconstruction by the manufacturer, which was not the situation in this case.

2. The Commissioner (Appeals) upheld the lower authority's decision, leading the appellants to challenge the order.

3. The appellant cited the judgment in Norris Medicines Ltd. v. CCE & CC Surat, along with other relevant cases, to support their claim that the Modvat credit cannot be denied for exported goods. They argued that the impugned order should be set aside based on the settled legal position.

4. The Departmental Representative reiterated the department's stance.

Judgment:
After considering the submissions and reviewing the cited case-law, the Tribunal found that the judgment in Norris Medicines Ltd. v. CCE & C, Surat supported the appellant's claim. The Tribunal noted that the Bombay Bench had allowed the assessee's claim, emphasizing that once goods are exported under bond, Modvat credit cannot be denied. The Tribunal highlighted the government's policy to encourage exports and ensure that exported products and inputs used in export products are not burdened with domestic levies. Consequently, the Tribunal set aside the impugned order and allowed the appeal, providing consequential relief as per law.