Rule 57T declaration period begins when premises becomes a factory on commencement of manufacture, not on receipt of capital goods.

For capital goods received before manufacturing begins, the three-month period for filing a declaration under Rule 57T(1) of the Central Excise Rules, 1944 starts only when the premises becomes a factory by commencement of manufacture, not when the goods are first brought into the premises. Because a factory under Section 2(e) is a place where excisable goods are actually manufactured, the declaration filed within three months of registration and production was treated as timely. The delay was therefore within the condonable period, and Modvat credit was available.

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Issues: Whether the period of three months under Rule 57T(1) of the Central Excise Rules, 1944 for filing declaration in respect of capital goods was to be computed from the date of receipt of the capital goods or from the date on which the premises became a factory upon commencement of manufacturing activity.

Analysis: The declaration was filed within three months from the date of registration and commencement of manufacturing, but beyond three months from the date when the capital goods were first brought into the premises. The relevant question was whether the premises could be treated as a factory on the earlier date. Since, under Section 2(e) of the Central Excise Act, a factory is a place or premises in which excisable goods are manufactured, the premises did not become a factory until manufacturing actually commenced. Consequently, the capital goods were received in the factory only when the unit became a factory for excise purposes. The declaration was therefore within the condonable period, and the delay had been rightly condoned.

Conclusion: The declaration period under Rule 57T(1) had to be reckoned from the date the premises became a factory, not from the earlier date of receipt of capital goods; the assessee was entitled to the credit.

Final Conclusion: The revenue's challenge to the grant of Modvat credit failed, and the order in favour of the assessee was sustained.

Ratio Decidendi: For capital goods received before manufacturing starts, the three-month period for filing declaration under Rule 57T(1) begins only when the premises becomes a factory by commencement of manufacture, not on the earlier date of receipt of goods.

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