ORDER
S.S. Sekhon, Member (T)
1. The appellants during the period March, 91 to October, 92 utilised Modvat credit availed by them on certain inputs for payment of duty on finished products for which those inputs were not declared as inputs.
2. Lower authority have denied this Modvat credit utilization and have ordered the reversal of credit availed, with penalties and interests. The inputs on which the credits were availed were used in the manufacture of final products, which was only on entirely exported. Therefore, the inputs credit as available in the books was used to discharge duty on certain other final products in which the inputs were not and cannot be used.
3. After hearing both sides and considering the issues involved, we find that it is a well settled position in Modvat credit that one to one correlation of inputs and the final product is not required to be insisted upon and credit availment and utilisation cannot be denied on simple procedural irregularities.
4. We find, that the appellants were entitled to refund of credit availed on inputs, which were entirely used up in their export products. These refunds so obtained could have been utilized by them to discharge duty on the other final products, which they were clearing. Therefore, we find that it was only a procedural lapse, if any, in utilizing the credit on the inputs, which have been exported after manufacturing final products therefrom. We do not find any reason or cause to deny the Modvat credit availed and utilized. We, therefore, do not support the order reversing the same. Once we do not find any reason to order the reversal of the credit, we do not subscribe to any penalty or interest consequent thereto.
5. Since, this is a case of consequential refund of credit, otherwise eligible, on inputs used in export products, we make it clear, it does not in any way to subscribe to the theory that inputs credit on an input not used in the final products is eligible to discharge duty on other final products. This order would be available only if credit accumulating due to export, which is not capable of being debited.
6. Appeals are allowed with consequential relief, if any, as per law.