Procedural delay in return of job-worker inputs cannot deny Modvat credit when extension power exists and no reasoned refusal is made.

Modvat credit could not be denied merely because inputs returned from job workers were received after the prescribed 60 days, where the assessee had sought extension and the competent authority had not passed any reasoned order on that request. The rule empowered the Assistant Commissioner to extend time, so the authority was expected to decide the application before fastening duty liability. The delay was treated as procedural and, by itself, insufficient to defeat credit, especially where the provision was meant to prevent double taxation. Denial of credit was therefore unjustified on the stated facts.

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Issues: Whether Modvat credit could be denied for return of inputs from job workers beyond the prescribed 60 days when the assessee's request for extension under the rule was neither granted nor refused by the Assistant Commissioner.

Analysis: The relevant rule permitted the Assistant Commissioner to extend the period beyond 60 days. The assessee had sought extension, but the application was not decided. The authority was required to either grant the extension or pass a reasoned order refusing it before fastening duty liability. As the goods were received after 60 days, the lapse was procedural in nature and could not by itself justify denial of credit, particularly when the statutory provision empowered condonation and was intended to avoid the effect of double taxation.

Conclusion: Denial of Modvat credit was not justified; the issue was decided in favour of the assessee.

Ratio Decidendi: Where a statute confers discretionary power to extend time and the competent authority fails to decide the request by a reasoned order, credit or relief cannot be denied solely on account of the procedural delay.

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