Modvat credit declaration timing counts from factory commencement, not first receipt of capital goods.

Modvat credit on capital goods was treated as admissible where the Rule 57T declaration was filed after first receipt of the goods but within the period reckoned from the date the premises became a factory and manufacture commenced. The relevant filing period was computed by reference to the factory's coming into existence for manufacturing purposes, not mechanically from the first receipt of capital goods. The declaration, filed after registration and commencement of production, was accepted as validly within time, and the delay was condoned. The analysis relied on the definition of factory under the Central Excise Act and earlier Tribunal decisions supporting this construction.

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Issues: Whether Modvat credit on capital goods was admissible when the declaration under Rule 57T was filed after the first receipt of capital goods but within the prescribed period from the date on which the premises became a factory and commenced manufacture.

Analysis: Rule 57T required a manufacturer intending to take credit on capital goods under Rule 57Q to file a declaration before the Assistant Commissioner, with a proviso permitting delayed filing within the allowable period on sufficient cause being shown. The dispute turned on whether the relevant starting point for computing the period was the first receipt of capital goods or the date when the premises acquired the character of a factory and manufacturing activity began. The declaration was filed after registration and commencement of production, and the delay had been condoned. The rule was applied in the light of the definition of factory under Section 2(e) of the Central Excise Act and the earlier Tribunal decisions relied upon by the assessee.

Conclusion: Modvat credit was held admissible and the declaration was treated as having been validly filed within time from the date the factory came into existence and manufacture commenced.

Ratio Decidendi: For Modvat credit on capital goods, the declaration period under Rule 57T is to be computed from the date the premises becomes a factory for manufacturing purposes, and not mechanically from the date of the first receipt of capital goods.

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