Modvat credit on furnace oil denied for want of stock and for being claimed beyond the prescribed limitation period.

Modvat credit on furnace oil was held unavailable where, on the date of the credit application, the input was not lying in stock and had not been received in the factory in the manner required after the declaration under Rule 57G. The statutory condition in Rule 57H(1B) was therefore not satisfied, so credit could not be claimed on that basis. The claim also failed on limitation because credit was sought beyond six months from the date of the modvatable documents, as recognised in the Larger Bench decision relied upon. The disallowance of credit was thus upheld.

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Issues: Whether Modvat credit on furnace oil could be allowed when, on the date of the application, the input was no longer lying in stock and the claim was also made beyond the permissible time limit.

Analysis: The relevant declaration for the input had been filed earlier, but the claim for credit related to furnace oil received during a later period when, on the date of application, no quantity of that input was held in stock by the assessee. Under Rule 57H(1B), credit was available only where the input was lying in stock or had been received in the factory after filing the declaration under Rule 57G. On those facts, the statutory condition for availing credit was not satisfied. The claim also failed on the time aspect, as credit could not be taken after six months from the date of the modvatable documents, in view of the Larger Bench decision relied upon.

Conclusion: The Modvat credit was rightly disallowed and the assessee's challenge failed.

Ratio Decidendi: Modvat credit under Rule 57H(1B) is unavailable unless the input is lying in stock or received in the factory in accordance with the declared procedure, and credit cannot be taken beyond the prescribed limitation period.

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