Modvat credit balance claim upheld where lesser credit was taken by mistake and time-bar rule did not apply.

Modvat credit under amended notification could be claimed for the remaining 5% where the assessee had initially taken only 10% under a mistaken belief that credit was restricted to that extent. The balance credit was treated as effectively availed within the prescribed period, so Rule 57G(5) did not operate as a time-bar to deny it. On that basis, the assessee was entitled to the remaining credit under Notification No. 60/97-C.E. (N.T.), and the denial of credit and penalty were unsustainable.

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Issues: Whether the assessee was entitled to avail the balance 5% Modvat credit under the amended notification despite having initially taken only 10% credit and claiming the balance later, and whether Rule 57G(5) barred such credit as time-barred.

Analysis: The claim was not one of failure to take credit within six months; rather, the assessee had taken a lesser amount under a mistaken belief that credit was restricted to 10%. The balance credit had already been effectively availed within the prescribed period, and the assessing officer had not corrected the mistake at the assessment stage. On that footing, the restriction in Rule 57G(5) did not apply to deny the additional credit.

Conclusion: The assessee was entitled to the remaining 5% credit under Notification No. 60/97-C.E. (N.T.) dated 27-11-1997, and the denial of credit and penalty were unsustainable.

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