Modvat credit on job-worker capital goods turned on duty payment date, with TR 6 challan payment supporting eligibility.

Modvat credit on capital goods sent to a job worker could not be denied merely because the goods were received back after a long interval, where duty had been paid through TR 6 challan and credit was taken shortly thereafter. Rule 57S was treated as making the date of duty payment the relevant date for eligibility, and earlier Tribunal rulings accepting TR 6 challan payment were followed. A contrary precedent was distinguished because it arose on different facts and did not apply where duty had in fact been paid before the credit claim. The denial of credit was therefore unsustainable and the assessee was entitled to the credit.

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Issues: Whether Modvat credit on capital goods removed to a job worker could be denied on the ground that the goods were received back after a long interval and duty had been paid through TR 6 challan, and whether the date of payment of duty was the relevant date for availing credit under Rule 57S of the Central Excise Rules.

Analysis: The capital goods were sent to the job worker without duty payment, duty was subsequently paid through TR 6 challan, the goods were received back thereafter, and Modvat credit was taken within four months of the duty payment. The earlier Tribunal decisions relied upon accepted TR 6 challan payment as sufficient for credit and treated the date of duty payment on capital goods as the relevant date for determining eligibility. The precedent cited against the assessee arose on different facts and did not govern a case where duty had in fact been paid and the credit was claimed shortly thereafter.

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

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