MODVAT credit limitation on imported scrap runs from factory receipt, not port duty payment, so timely credit is admissible.

For imported metal scrap cleared from port custody, the period for availing MODVAT credit runs from the date of clearance and receipt in the factory, not merely from the date customs duty was assessed or paid at the port. Credit taken within six months of such clearance and receipt was therefore within time. Where the assessee was not responsible for the delayed physical receipt and no prejudice was caused to Revenue, denial of credit on limitation grounds was not justified.

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Issues: Whether MODVAT credit on imported metal scrap was admissible when the goods, though duty-paid at the port earlier, were cleared and reached the factory only later and the credit was taken within six months of such clearance and receipt.

Analysis: The goods had been assessed to customs duty and were released by the port authorities only upon clearance. The period for taking MODVAT credit was held to run from the date of such clearance and receipt in the factory, not merely from the date of assessment or payment of duty at the port. Since the assessee was not at fault in the delayed physical receipt of the goods and no prejudice was caused to the Revenue, the credit could not be denied on the ground of limitation.

Conclusion: The MODVAT credit was admissible, and the denial of credit by the Tribunal was not justified.

Ratio Decidendi: For imported goods released from custody of the port or custodian, the limitation for availing MODVAT credit is to be computed from the date of clearance and receipt of the goods in the factory, not merely from the date of customs assessment or duty payment.

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