MODVAT credit timing: no six-month limit could bar subsequent credit on duty-paid inputs used in manufacture

MODVAT credit under Notification No. 175/86 read with Rule 57B could be taken subsequently in respect of duty-paid inputs used in the manufacture of final products. The Tribunal held that no six-month outer limit could be read into the credit scheme, and the departmental reliance on earlier authority did not show that credit was restricted to that period. Denial of credit merely because it was taken later was therefore unsustainable, and the assessee was entitled to avail the credit.

---

---

Issues: Whether MODVAT credit under Notification No. 175/86 read with Rule 57B of the Central Excise Rules could be taken subsequently in respect of duty-paid inputs used in the manufacture of the final product.

Analysis: The dispute turned on whether a six-month outer limit could be read into the scheme for availing MODVAT credit. The Tribunal noted that the departmental reliance on an earlier decision did not establish that credit was confined only to a six-month period, and that the cited authorities supported the view that credit could be taken subsequently. The denial of credit on the ground of delayed taking was therefore unsustainable.

Conclusion: The assessee was entitled to take the credit subsequently, and the impugned order was set aside.

---