Modvat credit lapse turns on the rule's effective date; later Section 3A liability does not trigger forfeiture.

Rule 57F(17)(D) causing lapse of Modvat credit applied only where the manufacturer was liable to pay duty under Section 3A on 1-8-1997. As the assessee's Section 3A liability arose only from 1-9-1997, the operative date in the rule was not satisfied and the credit balance could not be treated as lapsed under that provision. The Revenue's challenge to the finding on the inapplicability of the rule failed, and the demand based on lapse of Modvat credit was held unsustainable.

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Issues: Whether the benefit of Modvat credit balance stood lapsed under Rule 57F 17(D) where the manufacturer became liable to pay duty under Section 3A only from 1-9-1997 and not on 1-8-1997.

Analysis: Rule 57F 17(D) applied only to manufacturers who were required to pay duty under Section 3A on 1-8-1997. The operative date in the rule was material, and the assessee's liability under Section 3A arose only from 1-9-1997. Since the Revenue did not successfully assail the finding that the rule was not applicable to the assessee on the relevant date, the credit could not be treated as lapsed under that provision.

Conclusion: The rule did not apply to the assessee on 1-8-1997, and the Revenue's challenge failed.

Final Conclusion: The demand based on lapse of Modvat credit was not sustainable, and the Revenue's appeal was rejected.

Ratio Decidendi: A provision causing lapse of credit applies only when the statutory conditions and the relevant effective date specified in the rule are satisfied; liability arising from a later date does not attract the lapse provision.

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