Modvat credit on capital goods upheld where factory registration date governed timeliness of the declaration

For purposes of the second proviso to Rule 57T(1) of the Central Excise Rules, a declaration for Modvat credit on capital goods may be treated as filed within time by taking the factory registration date as the relevant reference point where the unit was not yet registered and production had not commenced. Receipt of the capital goods before registration did not defeat credit, because the proviso was read to permit delayed filing within the extended period from receipt and the administrative circular was found consistent with that approach. Modvat credit on the capital goods was therefore allowed, and the Revenue's challenge failed.

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Issues: Whether the declaration for availing Modvat credit on capital goods could be treated as filed within time by reckoning the date of registration of the factory as the relevant date under the second proviso to Rule 57T(1) of the Central Excise Rules, 1944, and whether credit could be denied because the capital goods were received before such registration.

Analysis: The declaration requirement under Rule 57T(1) was construed along with its second proviso, which permits delayed filing within the prescribed extended period from the date of receipt of the capital goods in the factory. The expression "factory" was read in the context of Central Excise registration, and the receipt of goods before registration was held not to defeat the claim where the unit had not yet come into production. The administrative circular relied upon by the Revenue was found consistent with this view, and the prior Tribunal view supporting credit where registration preceded production was applied.

Conclusion: The declaration was validly treated as within time, and the assessee was entitled to Modvat credit on the capital goods. The Revenue's challenge failed.

Ratio Decidendi: For the purposes of the second proviso to Rule 57T(1), where a new factory is not yet registered and production has not commenced, the date of registration may be treated as the relevant reference point for accepting the declaration for capital goods received earlier.

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