Per G.N. Srinivasan :

These are three appeals filed by the department against the decision of the Collector (Appeals), Mumbai who by the impugned Orders had held that the respondent in the appeals are entitled to benefit of notification No. 204/92 dated 9.5.1992 reversing the findings of the Assistant Collector who in the Orders- in -original had denied the benefit of the said notification on the ground that the exported goods were manufactured by availing benefit of modvat on the exempted materials.

2. Facts of the case are the respondents have imported goods described as Hexa chlorocyclopentadiene and sought clearance for home consumptions. They were transferee of an advance licence issued to M/s Selective Chemicals Ltd. who was a merchant exporter. It is noticed that the export products has been manufactured by their exporting manufacturer by availing benefit in terms of Rule 56A/57A of the Central Excise Rules. However, the said benefit of modvat was reversed subsequent to the physical shipment of the goods. The A.C. who heard the matter on the basis of condition (vi) of the notification 204/92 r/w 67 of the Import policy held that the facility should not be available as the exported material had been made after availing modvat credit. The A.C. by his order in original denied the appellants benefit of the exemption notification. In the impugned orders Collector (Appeal) has held that once a transfer has been made by transferability has been accepted by the licensing authority after the availment of modvat credit was reversed the Customs authorities cannot question it as the modvat claim became nullity. Therefore, the Collector (Appeals) in respect of all appeals rejected the contentions of the department and allowed the appeal.

3. It is contended by the department that in terms of condition No. 6 of the notification 204/92 once the exported goods were manufactured after availing of credit under Rule 57A i.e. modvat the exemption cannot be availed of for the import of the goods. The condition does not speak of what will happen if it is reversed. Customs authorities are not questioning the power of the licensing authorities to transfer the goods. They are only interpreting the notification and its admissibility of such benefits arising under that notification to the imported goods.

4. As against this ld. Counsel Shri Kantawala said that condition No. 6 will be applicable only to the licensee not to the transferee of licence. He invited our attention to clause (8) of the said notification to show that once the endorsement of transferability has been certified by the licensing authority the benefit of the notification should be allowed in favour of the transferee. He also invited our attention to the judgment of the Supreme Court in Chandrapur Metals Works' case. He pleads before us that whatever may be the judgment of the Orissa High Court judgment in Raj Exports Aluminium Co. Ltd. case in 1996 (87) ELT 349, the case has to be seen in the touchstone of the Supreme Court case.

5. We have considered the rival submissions. The facts are not in dispute. The advance licence had been given in favour of the licencee Selective Chemicals and the export product have been manufactured by their supporting manufacturer by availing benefits in terms of Rule 57A of the Central Excise Rules. If we see clause (6) of the advance licence which is extracted below:

"that where export goods are manufactured availing credit of Central Excise Duty or Additional Customs Duty in respect of any of the materials permitted import under the said licence, under rule 56A or 57A of Central Excise Rules, 1944, the facility of sale or transfer of materials or the said licence shall not be available."

6. Once the modvat credit has been taken from the reading of the above clause it will be clear that the goods which are exported should not be made taking modvat credit and once such modvat credit is taken, the benefit of the advance licence shall not be given, whic