ORDER
K.S. Venkataramani, Vice President
1. In this case the Appellants are availing of Modvat credit. They have also made certain clearances of their final product duty free under Notification 263/87 which prescribes following of Chapter X procedure of the Central Excise Rules as condition for availing of Notification. The lower authorities denied exemption to the Appellant on the ground that they have taken Modvat credit in respect of the final product cleared under Chapter X procedure. Rule 57C was invoked which lays down that the Modvat credit cannot be taken in respect of the exempted goods.
2. The order of the Assistant Commissioner of Central Excise, Division-II, Vadodara denying exemption has been upheld by the Commissioner of Central Excise (Appeals), Ahmedabad leading to the present appeal.
3. After hearing Shri S.D. Gohil, the learned Consultant for the Appellant and Shri D. Gurnani, the ld. DR, we are of the view that the matter now stands settled by the decisions of the Tribunal which held that in such cases where there is clearances of the final products after availing of Modvat credit both on payment of duty and under exemption without payment of duty, the assessee should reverse the credit of the duty availed on the inputs which have gone into the production of the exempted final product. We have been informed that the Appellant have already effected such reversal of credit of inputs which has been used in the clearance of the final product under Chapter X procedure without payment of duty. We are also of the view that this cannot be made a ground for denial of exemption under Notification 263/87 to the Appellant so long as the Notification does not have a specific condition barring exemption if Modvat credit is being availed. The impugned order is therefore set aside and the appeal is allowed.