Modvat credit re-availment allowed where the original credit was timely and later correction of accounts followed receipt of the proper Bill of Entry.

Modvat credit was treated as admissible where the assessee had taken credit within the prescribed period on receipt of goods and the relevant document, later reversed it on audit objection, and then re-availed it after obtaining the correct duplicate Bill of Entry. The Tribunal held that delay in securing the proper customs document did not bar re-availment when the original credit entry was timely and the later step was only a correction of accounts, not a fresh taking of credit beyond time. The six-month objection was therefore rejected.

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Issues: Whether Modvat credit was inadmissible merely because the assessee obtained the prescribed Bill of Entry and completed the accounting entries after six months, when the original credit was taken within time and later reversed on objection before being re-availed.

Analysis: The credit was initially taken within the prescribed period on receipt of goods and issue of the document, and the subsequent reversal was made on objection by the audit authorities. The delay in securing the correct duplicate Bill of Entry from the Customs House was not treated as a bar to re-availment, since the Rules did not prohibit completion of the credit process after six months where the original availment was timely and the later delay was occasioned in obtaining the proper document. The Tribunal treated the matter as correction of an accounting entry rather than an impermissible fresh taking of credit beyond time.

Conclusion: The credit was held to be admissible, and the objection based on the six-month period was rejected.

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