Modvat credit on imported scrap was time-barred where delay was counted from customs clearance, not factory receipt.

Modvat credit on imported scrap was treated as time-barred where it was taken beyond six months from the Bill of Entry under Rule 57G(5), and the relevant period was not shifted to the date of receipt in the factory after customs clearance. In the absence of proof that customs detention prevented use of the date of out-of-charge, the earlier customs-clearance date remained controlling. Credit was also found unsupported because the gate passes relied on were not the authorised documents contemplated by Rule 57G(2). On that basis, the credit was held inadmissible and the allowance of Modvat credit was unsustainable.

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Issues: Whether Modvat credit taken beyond six months from the date of the Bill of Entry was barred under Rule 57G(5) of the Central Excise Rules, 1944, and whether the period had to be computed from the date of receipt of goods in the factory after customs clearance.

Analysis: The credit was claimed on imported scrap assessed to customs duty and duty paid on 20-1-1996, while the credit entries were made much later on the basis of gate passes issued by a clearing agent. The respondent did not establish that the goods were detained by customs or that the date of out-of-charge was unavailable for any legally relevant reason. In the absence of evidence of customs detention, the relevant date could not be shifted to the later dates of receipt in the factory. The reliance placed on the earlier decision dealing with clearance from the custody of the custodian was held inapplicable because that case turned on detention by the custodian, whereas here the goods had already been cleared after assessment. The documents used for availing credit were also not the authorised documents contemplated by Rule 57G(2).

Conclusion: The credit was time-barred and inadmissible; the order allowing Modvat credit was unsustainable.

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