Modvat credit on lubricating oil: Board clarification prevented denial for taking credit after six months.

Modvat credit on lubricating oil was treated as admissible notwithstanding that it was taken beyond six months from the duty-paying documents, because the Board later clarified that credit was not intended to be denied on such goods. The note explains that lubricating oil was notified under Rule 57Q from 1-3-97 and thus fell outside Rule 57A from that date, and that Circular No. 429/62/98-CX dated 3-11-98 removed the basis for disallowance on the ground of delay. The operative effect stated is that the six-month lapse could not justify denial of credit, and the credit remained utilisable.

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Issues: Whether Modvat credit on lubricating oil could be denied on the ground that the credit was taken beyond six months from the date of the duty-paying documents, when the Board had subsequently issued a circular clarifying that credit was not intended to be denied on such goods.

Analysis: Lubricating oil had been notified under Rule 57Q from 1-3-97 and was therefore outside the scope of Rule 57A from that date. The Board later issued Circular No. 429/62/98-CX dated 3-11-98 clarifying that the intention was not to deny Modvat credit on such goods under Rule 57A. In view of that clarification, the delay between the date of the documents and the taking of credit was not a valid ground for disallowance.

Conclusion: The credit could not be denied on the ground of six months' lapse, and the appellants were entitled to utilise the impugned credit.

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