Modvat credit and six-month document limit: amended Rule 57G could not defeat credit already taken before the change.

Modvat credit could not be disallowed merely because the duty-paying documents were older than six months where the credit had already been taken before the amendment to Rule 57G introduced that time-limit. The operative principle was that the amended restriction, effective from 29-6-1995, did not apply retrospectively to credit validly availed before its commencement. On that basis, the later six-month condition could not be used to deny the credit, and the denial was held unsustainable.

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Issues: Whether Modvat credit could be denied on the ground that the duty-paying documents were more than six months old when the credit had been availed before the amendment to Rule 57G prescribing that time-limit.

Analysis: The dispute turned on the effect of the amendment to Rule 57G introducing a six-month restriction with effect from 29-6-1995. The governing principle applied was that the amended time-limit would not govern credit already taken before the amendment came into force. Since the assessee had availed the credit prior to the amendment, the later restriction could not be applied to disallow the credit merely because the documents were older than six months.

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

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