Accrued MODVAT credit survives later withdrawal when inputs were received before the amendment and records were duly maintained.

Deemed MODVAT credit on waste and scrap of iron and steel and ship-breaking scrap was treated as admissible where the inputs were received in the factory while the scheme was still in force, even though the RG-23A Part-II entry was made after withdrawal of the facility. The operative principle was that credit accrued on receipt of the inputs and could not be taken away by a later amendment; the later register entry was only procedural. Maintenance of RG-23A Part-I records and undisputed receipt before the amendment supported entitlement to the credit, and the accrued benefit remained available despite the change in law.

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Issues: Whether deemed MODVAT credit on waste and scrap of iron and steel and ship breaking scrap, received before withdrawal of the deemed credit facility but entered in the RG-23A Part-II account after the withdrawal, remained admissible.

Analysis: The admissibility of the credit depended on the receipt of the inputs in the factory when the scheme was still in force, not on the later date on which the credit entry was made in the RG-23A Part-II register. Credit accrued when the inputs were received, and a subsequent amendment withdrawing the benefit could not take away that accrued right. The maintenance of RG-23A Part-I records and the undisputed receipt of goods before the amendment supported the claim. The later entry in Part-II was only a procedural completion and did not disqualify the credit. The reasoning was consistent with the principle that earned credit, once validly accrued, is not lost merely because of a later change in the law.

Conclusion: The deemed MODVAT credit was admissible to the assessee, and the appeal succeeded.

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