Modvat credit on returned goods was upheld by counting limitation from receipt of the returned goods, not original invoices.

Modvat credit on returned goods could not be denied merely because it was taken more than six months after the original invoices, since the six-month period under Rule 57G(2) had to be counted from receipt of the returned goods. The original invoices served only as proof of duty-paid character and did not control the date for computing limitation where the goods were returned after use. On the facts, no breach of the six-month requirement was established, and the credit was admissible.

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Issues: Whether Modvat credit on returned goods could be denied on the ground that it was taken beyond six months from the date of the original invoices, and whether the period under Rule 57G(2) had to be counted from the date of receipt of the returned goods.

Analysis: The returned diesel engine parts were received back from the Railways after use and the relevant date for computing the six-month period was the date of receipt of the returned goods, not the date of the original invoices issued when the goods were first supplied. The original invoices were only evidence of duty-paid character and did not govern the date of return. On the facts, no violation of the six-month requirement under Rule 57G(2) was established.

Conclusion: The credit was held admissible and the Revenue's challenge failed.

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