Per S.S. Sekhon :

M/s. Andhra Steel Corporation Ltd., Respondents herein, referred to as the 'Assessee', manufacture Excisable goods falling under Chapter 72. They were also undertaking job work under erstwhile Rule 57F (2) of Central Excise Rules 1944. As it appears from the record, during the period from April 94 to Dec 94 they had availed Modvat credit on the input "Liquid Oxygen" and had utilized the same for the manufacture of goods on job work basis. The goods so manufactured were cleared without payment of duty. Erstwhile Rule 57C of Central Excise Rules, 1944 provided that no credit of the specified duty paid on the inputs used in the manufacture of a final product shall be allowed if the final product is exempt from the whole of the duty of excise or is chargeable to Nil rate of duty. Besides Rule 57A provided that the inputs in respect of which the credit had been allowed may be utilized in or in relation to the manufacture of final products for which such inputs had been brought in to the factory.

2. The credit availed by the assessee on 'Liquid Oxygen' utilized in the manufacture of the goods on job works basis cleared without payment of duty, appeared to be not in c