Purposive reading of transitional Modvat credit allowed inputs received before declaration, not just the last pre-declaration consignment.

Rule 57H(1) of the Central Excise Rules, 1944 was construed purposively as a transitional Modvat provision. The expression "immediately before" was read broadly to mean inputs received preceding the date of declaration, not merely the last consignment before filing under Rule 57G(1). Where the statutory conditions of stock and duty-paid inputs were otherwise satisfied, Modvat credit remained admissible on inputs received before declaration. A narrower reading was rejected because it would defeat the scheme's transitional object and create anomalies in credit availability.

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Issues: Whether, under Rule 57H(1) of the Central Excise Rules, 1944, Modvat credit could be allowed on inputs received before filing of the declaration under Rule 57G(1), and whether the expression "immediately before" covered all such prior receipts or only the last consignment received before the declaration.

Analysis: Rule 57H(1) had to be read as a whole in the context of the Modvat scheme and its transitional object. The expression "immediately before" was held to be interchangeable with "preceding the date" and could not be confined to the last consignment alone where that construction would defeat the scheme. Credit was therefore permissible for inputs received before the declaration, provided the statutory conditions regarding stock and duty-paid inputs were satisfied. The contrary view would create anomalies and undermine the legislative purpose of the provision.

Conclusion: The expression "immediately before" was construed broadly, and Modvat credit was admissible on the disputed inputs received prior to filing of the declaration. The Revenue's appeal failed.

Final Conclusion: The majority held that the assessee was entitled to the Modvat credit claimed under the transitional rule, and the departmental challenge to the grant of credit was rejected.

Ratio Decidendi: A transitional Modvat provision must be construed purposively so that the expression "immediately before" covers inputs received prior to filing of the declaration when the statutory conditions are otherwise met, rather than being restricted to the last consignment alone.

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