Per Shri G.R. Sharma : The captioned appeal is filed against the order-in-appeal dated 5.9.94 passed by the Collector (Appeals). The Collector (Appeals) upheld the order of Asstt. Collector. The Asstt. Collector held that modvat credit is not admissible on the portion of input, the corresponding final product of which are cleared under exemption. The Asstt. Collector confirmed the demand for Rs. 13,390.11.

2. The facts of the case, in brief, are that the appellants are engaged in the manufacture of pine oil. They procured certain inputs and took modvat credit on those inputs. A part of pine oil manufactured by the appellants was cleared by them in terms of Notification No. 191/87-CE dated 4.8.87 following the Chapter X procedure. The Department alleged that pine oil was cleared by the appellants without payment of duty in terms of exemption Notification No. 191/87-CE dated 4.8.87 and therefore, modvat credit of duty on that portion of input which was used in the manufacture of this quantity of pine oil was not available to the appellants. The lower authorities accordingly, confirmed the demand.

3. Shri J.S. Agarwal, the learned Advocate appearing for the appellants submitted tha