Modvat credit on imported capital goods depends on receipt date, so later 75% restriction could not apply.

For Modvat credit under Rule 57Q, the material date for determining eligibility and the extent of credit is the date on which imported capital goods are received in the factory, not the date of installation. Because the goods were received before 1-3-97, when the 75% restriction was introduced, the later limitation could not reduce the credit already accrued on receipt. The Board's circular supported this interpretation. The respondent was therefore entitled to 100% Modvat credit of the CVD, and the Revenue's challenge failed.

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Issues: Whether Modvat credit on imported capital goods was admissible at 75% or 100% of the CVD, having regard to the date of receipt of the goods in the factory and the subsequent change in the restriction from 1-3-97.

Analysis: The restriction limiting credit to 75% came into force only from 1-3-97, while the goods had been received in the factory before that date though installed later. For the purpose of Modvat credit under Rule 57Q, the material date is the date of receipt of the goods in the factory, because the right to take credit accrues on receipt and not on installation. Since there was no restriction on the quantum of credit on the date of receipt, the later restriction could not be applied to the imported capital goods. The Board's circular also supported this view.

Conclusion: The respondent was entitled to 100% Modvat credit of the CVD, and the Revenue's challenge failed.

Ratio Decidendi: For Modvat credit under Rule 57Q, eligibility and the extent of credit are determined by the law in force on the date the goods are received in the factory, and a later restriction cannot curtail the vested entitlement already accrued on receipt.

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