Deemed Modvat credit turns on actual receipt of scrap before withdrawal, not later register entry.

Deemed Modvat credit on iron and steel scrap depended on the actual receipt of the inputs in the factory before withdrawal of the concession on 29.08.1986, not on the later date of entry in the RG-23A Part-II register. The operative verification was to be made from the D-3 intimation and RG-23A Part-I register. Where the record did not clearly show whether the disputed scrap was received before or after the cutoff date, denial of credit could not be sustained without a finding on that factual issue, and fresh adjudication was necessary.

---

---

Issues: Whether deemed Modvat credit on iron and steel scrap received before 29.08.1986 could be denied merely because the credit entries in the RG-23A Part-II register were made later, and whether the matter required remand for a finding on the actual date of receipt.

Analysis: The deemed credit under the order issued in exercise of Rule 57G(2) of the Central Excise Rules, 1944 was available for specified inputs lying in stock on or after 01.03.1986, and the withdrawal of the facility for iron and steel scrap with effect from 29.08.1986 meant that receipts up to 28.08.1986 continued to qualify. The decisive factor was the actual receipt of the consignments in the factory, to be verified from the D-3 intimation and the RG-23A Part-I register, and not the later date of entry in the RG-23A Part-II register. As the order under challenge did not record a clear finding on whether the disputed scrap had in fact been received before or after 29.08.1986, the issue could not be finally resolved on the existing record.

Conclusion: The denial of deemed Modvat credit could not stand without a finding on the actual date of receipt, and the matter was required to be remanded for fresh adjudication on that factual question.

Ratio Decidendi: Where deemed credit is linked to goods actually received and lying in stock before withdrawal of the concession, the decisive date is the date of receipt of the inputs and not the date on which credit is entered in the register.

---