Modvat declaration delay before credit did not justify penalty where capital goods were received and used in manufacture.

Penalty under Rule 209(1)(bb) was held unwarranted where the Rule 57T declaration for capital goods was filed after receipt of the goods but before Modvat credit was taken. The capital goods had been received and used in manufacture, and an application for condonation of delay was also made. Relying on the Board's circular, the text states that credit should not be denied merely because the declaration was filed after receipt, so long as it was filed before credit was availed. On those facts, the delayed declaration did not justify penalty.

---

---

Issues: Whether penalty under Rule 209(1)(bb) of the Central Excise Rules, 1944 was imposable when the declaration under Rule 57T of the Central Excise Rules, 1944 was filed after receipt of the capital goods but before taking Modvat credit.

Analysis: The capital goods had been received in the factory and were used in the manufacture of finished goods. The declaration under Rule 57T was filed before Modvat credit was taken, and an application for condonation of delay had also been made. The Board's circular clarified that credit should not be denied merely because the declaration was filed after receipt of the capital goods, provided the declaration is filed before taking credit. On these facts, the delayed filing did not justify penalty.

Conclusion: Penalty was not imposable on the assessee.

---