Modvat credit cannot be denied for a short delay in recording inputs where no time limit is prescribed.

Modvat credit could not be denied merely because the entry in the records was made 3 to 10 days after receipt of the inputs, as Rule 57G prescribed no specific time limit for taking credit. The statutory scheme did not permit rejection of credit on a bare timing objection where duty-paid supporting documents reached later, and the earlier view that documents had to accompany the goods was not accepted after the amended notifications. The denial of credit was therefore unjustified, and the assessee was entitled to the credit.

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Issues: Whether Modvat credit could be denied merely because it was entered in the records 3 to 10 days after receipt of the inputs, and whether Rule 57G permitted such denial in the absence of a prescribed time limit.

Analysis: The governing rule did not prescribe any specific time limit for taking Modvat credit after receipt of inputs. The credit could not therefore be refused solely on the ground of a short delay in making the entry. The earlier view that documents must necessarily accompany the goods was not accepted in the light of the amended position under the relevant notifications. The reasoning also accepted that a reasonable period may be allowed where supporting duty-paid documents reach later, and the statutory scheme did not confer any power on the Assistant Collector to reject credit on a mere timing objection in the absence of a clear limitation.

Conclusion: The denial of Modvat credit was unjustified, and the assessee was entitled to the credit.

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