MODVAT credit timing: balance credit taken later for an earlier short availment was not barred under Rule 57G.

MODVAT credit on imported goods could not be denied merely because the assessee took the balance credit after the period prescribed under Rule 57G of the Central Excise Rules, 1944. The credit entitlement had already arisen when the countervailing duty was paid, and the initial availment was only short of the full admissible amount. The later taking of the balance credit was treated as a correction of that short availment, not as a fresh or time-barred claim. Accordingly, the limitation in Rule 57G was held inapplicable to the differential credit, and the claim for the balance credit was upheld.

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Issues: Whether MODVAT credit could be denied merely because the assessee availed the balance credit beyond the period prescribed under Rule 57G of the Central Excise Rules, 1944.

Analysis: The appellant had imported the goods, paid the appropriate duty, and was eligible to take credit of the countervailing duty paid. The initial credit taken was less than the credit actually admissible, and the balance was taken later on noticing the short availment. On these facts, the later availment was not treated as a fresh or barred claim. The Tribunal relied on the earlier view that such differential credit is not hit by the limitation in Rule 57G where the credit entitlement itself had already arisen and the first availment was not in dispute.

Conclusion: Denial of MODVAT credit was held unsustainable, and the assessee's claim to the balance credit was upheld.

Ratio Decidendi: Where admissible MODVAT credit has already arisen and only the balance of such credit is taken later to make up an earlier short availment, the subsequent taking of differential credit is not barred merely by the time limit under Rule 57G.

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