HC : MODVAT credit reversible when final product cleared under purchaser's duty remission claim

HC directs reversal of input credit against clearance of aluminium castings under claim of duty remission by buyer for use in specific industrial process, in terms of Chapter X r/w Rule 57C of Central Excise Rules 1944; Notes Adjudicating Authority’s finding that assessee was reversing credit initially but resorted to jugglery subsequently, and since goods cleared under Chapter X procedure had not suffered any duty payment, MODVAT credit was reversible; Rejects assessee’s contention that choice of buyer to either claim MODVAT credit of duty paid or claim remission doesn’t make the goods exempt or chargeable to nil rate of duty; Relies on Kirloskar Oil Engines decision wherein it was held that MODVAT Credit in respect of inputs, which have been used in manufacture of final product that is fully exempted from whole of excise duty, is not available; States that since assessee had cleared goods without payment of duty, the case was covered by aforesaid decision, thus credit taken on aluminium ingots (inputs) was incorrect : Bombay HC

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