Modvat credit under Rule 57A triggered duty liability from the option date, even without one-to-one input correlation.

Opting for Modvat credit under Rule 57A triggered the duty obligation from the date of the option, where the manufacturer had availed credit on the same date. The absence of one-to-one co-relation between inputs and finished goods was treated as immaterial because the notification made the duty consequence depend on availing credit, not on individual matching of inputs to final products. The demand was therefore upheld and the order dropping it was set aside.

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Issues: Whether, upon opting for Modvat credit and availing such credit under Rule 57A, the assessee was required to pay duty from the date of option even if the inputs and finished goods could not be individually co-related.

Analysis: The respondents had opted for Modvat on 9-3-1993 and availed credit on the same date. Under Notification No. 175/86, a manufacturer who avails credit of duty paid on inputs used in specified goods cleared for home consumption under Rule 57A is required to pay duty from the date of opting for the scheme. The absence of one-to-one co-relation between inputs and finished products was held to be immaterial in view of the language of the notification and the admitted availing of credit.

Conclusion: The issue was decided against the assessee and in favour of the Revenue; the order dropping the demand was set aside and the appeal was allowed.

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