Modvat credit cannot be denied for a post-clearance claim; limited remand was ordered for duty-payment verification.

Modvat credit could not be denied merely because the claim was made after clearance of the goods, as the denial was unsupported by any material showing a knowing omission to claim credit despite liability. The assessee's asserted exemption under Notification No. 35/95 was not decided. The only remaining issue was factual verification of whether duty had been paid on the single yarn actually doubled, so the matter required limited remand to the adjudicating authority. The credit claim was therefore not rejected on timing alone.

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Issues: Whether Modvat credit can be denied merely because the claim for credit was raised after clearance of the goods, and whether the matter required remand for verification of duty payment on the input yarn.

Analysis: It was held that Modvat credit cannot be refused solely on the ground that it was not claimed at the time of clearance. The Commissioner (Appeals) had not supported the denial by any material showing that the assessee knowingly omitted to claim credit despite liability. The assessee's assertion was that the goods were exempt under Notification No. 35/95, but the question of exemption was not decided. The only remaining requirement was factual verification that duty had been paid on the single yarn actually doubled, which called for examination by the adjudicating authority.

Conclusion: Credit could not be denied merely because the claim was made later, and the issue was remanded for limited verification. The result was in favour of the assessee.

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