Reasonable time for Modvat credit claim prevents denial of higher notional credit taken after input receipt.

Higher notional Modvat credit could not be denied merely because it was taken after receipt of the inputs, since Rule 57B fixed no specific time for claiming it. The Tribunal held that the governing test was whether the credit was claimed within a reasonable time, and treated six months from eligibility as reasonable in the context of the excise scheme and allied tax legislation. As the credit was taken within that period, it remained admissible and could not be disallowed only because it was not entered at the time of input receipt or when filing the RT-12 return. The consequential demand and penalty therefore were not sustainable.

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Issues: Whether higher notional credit under the Modvat scheme could be denied merely because it was taken after receipt of the inputs and whether the credit, taken within six months of eligibility, was within a reasonable time.

Analysis: Rule 57B did not prescribe any specific point of time by which higher notional credit had to be taken. The only question, therefore, was whether the credit was claimed within a reasonable time. The Tribunal treated six months as a reasonable period in the context of the excise scheme and allied tax legislation. Since the credit was taken within that period, it could not be disallowed solely because it was not taken at the time of receipt of the inputs or at the time of filing the RT-12 return.

Conclusion: The assessee was entitled to avail the higher notional credit and the denial of credit, along with the consequential demand and penalty, was not sustainable.

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