Modvat credit limitation runs from clearance of imported goods, not duty payment on the Bill of Entry.

Rule 57G on Modvat credit is analysed on the basis that credit under the prescribed document becomes relevant only when imported inputs are actually cleared from the custodian and received in the factory. The six-month limitation under Rule 57G(5) is construed harmoniously with Rule 57G(3), so the operative date for computing time is the date of clearance of the goods, not the date of payment of duty on the Bill of Entry. On that reasoning, the credit was treated as admissible and the denial of credit as unsustainable.

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Issues: Whether, for the purpose of Rule 57G(5) of the Central Excise Rules, 1944, the six-month period for availing Modvat credit on a Bill of Entry is to be reckoned from the date of payment of duty on the Bill of Entry or from the date on which the imported goods were actually cleared from the custodian and became receivable in the factory.

Analysis: Rule 57G(3) permits credit only when the inputs are received in the factory under the cover of the prescribed document, and Rule 57G(5) bars credit after six months from the date of issue of such document. The relevant document could not be acted upon until the goods were released from the custody of the custodian and could be received by the manufacturer. The two sub-rules were therefore construed harmoniously, and the operative date for computing the limitation was taken as the date of clearance of the imported goods from the Airport Authority.

Conclusion: The six-month period was to be computed from the date of clearance of the goods from the custodian, not from the date of payment of duty on the Bill of Entry. The Modvat credit was therefore admissible and the denial of credit was unsustainable.

Final Conclusion: The demand disallowing Modvat credit was set aside and the assessee obtained consequential relief.

Ratio Decidendi: Where credit under Rule 57G depends on receipt of inputs under the prescribed document, the limitation for availing credit must be computed from the date when the goods are actually cleared and capable of receipt by the manufacturer, applying harmonious construction to the relevant sub-rules.

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