Modvat credit on capital goods turns on factory receipt date, not import or office receipt, with 75% restriction applied.

Modvat credit on capital goods under Rule 57Q is available only when the goods are used in the manufacturer's factory, so the relevant date is receipt in the factory, not import, purchase, or receipt in the office. On that reasoning, the 75% credit restriction applied by reference to the factory-receipt date, and the Budget 1997-98 explanatory note supported that interpretation. The appeal failed.

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Issues: Whether the applicable law for Modvat credit on capital goods is determined by the date of import or office receipt, or by the date the capital goods are received in the factory.

Analysis: Credit under Rule 57Q is available only for goods used in the factory of the manufacturer. The nexus with production arises when the capital goods are received in the factory, not when they are imported, purchased, or received in the company office. The notification restricting credit to 75% therefore applies according to the date of receipt in the factory, and the explanatory note to the Budget 1997-98 supports that reading.

Conclusion: The applicable date is the date of receipt of the capital goods in the factory, not the date of import or receipt in the office, and the restriction to 75% applies. The appeal failed.

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