Modvat credit under Rule 57B may be claimed later, since no express time limit applies and a reasonable period governs.

Modvat credit under Rule 57B could be taken after receipt of inputs because the rule prescribed no express time limit for claiming credit. The Court accepted the Tribunal's view that, where the scheme is silent on limitation, belated credit may be availed within a reasonable period, and that general limitation under Section 11A cannot be imported into the special Modvat recovery provision. Applying that approach, six months was treated as a reasonable period, and the issue was decided in favour of the assessee.

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Issues: Whether Modvat credit under Rule 57B could be taken at a later date after receipt of inputs, and whether such higher notional credit could be taken within a reasonable period.

Analysis: The question turned on whether the Modvat scheme contained any express prohibition against taking credit later than the date of receipt of inputs. The Tribunal had followed earlier decisions holding that where credit was not taken initially, it could still be availed later if the scheme did not fix a specific time limit. The Court noted that Rule 57B prescribed no time limit for claiming credit, unlike other provisions that expressly fixed a period. It also relied on the principle that, in the absence of a prescribed limitation, credit wrongly or belatedly availed could be dealt with within a reasonable period, and that general limitation under Section 11A could not be read into the special Modvat recovery provision.

Conclusion: Modvat credit under Rule 57B could be taken at a later date, and the Tribunal was right in treating six months as a reasonable period; the question was answered in favour of the assessee and against the revenue.

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