Modvat credit for intermediate goods inputs was upheld where Rule 57J applied and no unreasonable delay was shown.

Modvat credit on inputs used to manufacture intermediate goods could not be denied by applying the six-month limit in Rule 57G where the claim was governed by Rule 57J. Rule 57J operated notwithstanding the other rules and did not itself prescribe a time limit for taking credit. As the credit was taken within a period later aligned with a nine-month limit and the delay was not unreasonable, denial of credit was unsustainable. The assessee was therefore entitled to Modvat credit on the job-work inputs used in intermediate goods.

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Issues: Whether Modvat credit on inputs used in the manufacture of intermediate goods could be denied for not being taken within six months under Rule 57G, where the claim was covered by Rule 57J and the credit was taken within a period later recognised as nine months.

Analysis: The credit related to inputs sent for job work and used in the manufacture of intermediate goods. Rule 57J operated notwithstanding the other rules and did not prescribe a time limit for taking credit. The time taken was a little over six months, and the subsequent amendment of the rules prescribing nine months indicated that the period involved could not be regarded as unreasonable. The cited Tribunal decisions also supported the availability of credit on such inputs under Rule 57J.

Conclusion: The denial of credit was unsustainable and the assessee was entitled to Modvat credit.

Final Conclusion: The appeal succeeded, with the assessee obtaining the consequential benefit flowing from allowance of the credit claim.

Ratio Decidendi: Where inputs used in the manufacture of intermediate goods fall under Rule 57J, credit cannot be denied merely by applying the six-month limit in Rule 57G, particularly when the period taken is not unreasonable in light of the later-prescribed nine-month period.

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