Modvat credit under Rule 57A survived later duty payment on inputs; Rule 57E amendment was treated as clarificatory.

Modvat credit under Rule 57A was treated as allowable even where duty on the inputs was paid after their receipt in the factory, provided the required declaration was filed and duty payment could be shown. The then-existing Rule 57E was understood as dealing with a different contingency, namely variation of credit on refund to the supplier, so its silence on later payment did not defeat the substantive entitlement under Rule 57A. The later amendment to Rule 57E was regarded as clarificatory, removing doubt rather than expanding the scope of credit.

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Issues: Whether Modvat credit under Rule 57A of the Central Excise Rules, 1944 could be taken where duty on the inputs was paid after their receipt in the factory, and whether the later amendment to Rule 57E was only clarificatory.

Analysis: Rule 57A permits Modvat credit on specified inputs once the necessary declaration under Rule 57G is filed and it can be shown that duty has been paid on the inputs. The existence of Rule 57E at the relevant time dealt with variation of credit in a different contingency, namely refund to the supplier, and the absence of an express provision for later payment of duty did not exclude operation of the substantive entitlement under Rule 57A. The later amendment to Rule 57E was therefore treated as clarificatory and not as enlarging the scope of Rule 57A.

Conclusion: Modvat credit was allowable even where duty on the inputs was paid subsequent to receipt, and the amended Rule 57E was clarificatory in nature.

Final Conclusion: The reference was declined because no question of law arose, leaving the Tribunal's view in favour of the assessee undisturbed.

Ratio Decidendi: Where the substantive Modvat entitlement under Rule 57A is established, a later payment of duty on inputs does not defeat credit merely because the then-existing Rule 57E did not expressly provide for that contingency, since a clarificatory amendment may operate to remove doubt rather than create the right.

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