Timely Modvat reversal under Amnesty Scheme preserved customs exemption despite a short delay in interest payment.

A short delay of about eight days in paying interest, after the full Modvat credit had been reversed before the Amnesty Scheme cut-off date, did not defeat eligibility for exemption under Notification No. 203/92-Cus. The text treats the timely reversal of the entire credit as the substantive compliance requirement, while the delayed interest payment was only a minor lapse explained by uncertainty over the scheme's application. A certificate recorded reversal of credit for the relevant advance licences, and that evidence supported compliance with the scheme. The minor delay in interest reversal therefore did not remove the benefit of the Amnesty Scheme or the customs exemption.

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Issues: Whether a delay of about 8 days in payment of interest, after reversal of the entire Modvat credit before the cut-off date under the Amnesty Scheme, disentitled the assessee from claiming exemption under Notification No. 203/92-Cus.

Analysis: The entire Modvat credit had been reversed before the cut-off date prescribed by the Amnesty Scheme. The only lapse was a short delay in reversing the interest component, and the delay was explained as arising from uncertainty regarding the applicability of the scheme. The Commissioner had also recorded a certificate showing reversal of credit in respect of the relevant advance licences. In these circumstances, the minor delay in interest payment did not affect compliance with the scheme so as to deny the exemption.

Conclusion: The delay in reversing interest did not disentitle the assessee from the benefit of the Amnesty Scheme or the exemption under Notification No. 203/92-Cus.

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