Modvat credit for pre-acknowledgement inputs must follow Rule 57H, while disclosed records defeat extended limitation.

Modvat credit for inputs received before the dated acknowledgement of a declaration must be claimed under Rule 57H, not Rule 57G(2), because Rule 57H specifically governs pre-acknowledgement inputs and requires satisfaction of stock, receipt and use conditions. Prior permission of the Assistant Collector is therefore necessary, and entitlement cannot be presumed without an application and supporting particulars. On limitation, where the credit entries and related particulars were disclosed in statutory returns and RG 23A records, suppression or wilful misstatement is not established; the extended period cannot be invoked.

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Issues: (i) Whether Modvat credit could be taken under Rule 57G(2) in respect of inputs received before the dated acknowledgement of the declaration, without resort to Rule 57H. (ii) Whether prior permission of the Assistant Collector under Rule 57H(1) was necessary for availing credit on such inputs. (iii) Whether the notice invoking the extended period was barred by limitation for want of suppression or wilful misstatement.

Issue (i): Whether Modvat credit could be taken under Rule 57G(2) in respect of inputs received before the dated acknowledgement of the declaration, without resort to Rule 57H.

Analysis: Rule 57G(2) does not authorise credit for inputs received before the dated acknowledgement merely because the declaration has been filed. If that interpretation were accepted, Rule 57H would be rendered redundant. Rule 57H was introduced specifically, and notwithstanding Rule 57G, to permit credit for inputs received prior to the dated acknowledgement, subject to its own conditions.

Conclusion: The credit could not be claimed under Rule 57G(2) for inputs received before the dated acknowledgement; the assessee's contention was rejected.

Issue (ii): Whether prior permission of the Assistant Collector under Rule 57H(1) was necessary for availing credit on such inputs.

Analysis: Rule 57H(1) contemplates allowance of credit by the Assistant Collector upon satisfaction regarding stock position, receipt of inputs, and use in manufacture of dutiable final products. That satisfaction necessarily requires an application and supporting particulars from the manufacturer. In the absence of such an application, permission cannot be presumed.

Conclusion: Prior permission under Rule 57H(1) was necessary, and the assessee's plea was rejected.

Issue (iii): Whether the notice invoking the extended period was barred by limitation for want of suppression or wilful misstatement.

Analysis: The taking of credit and the relevant particulars had been reflected in the statutory returns and RG 23A statements. There was no provision requiring disclosure in the RT 12 return of the absence of permission under Rule 57H(1). On those facts, suppression was not made out, and the extended period could not be invoked.

Conclusion: The notice was time-barred insofar as it relied on the extended period; this issue was decided in favour of the assessee.

Final Conclusion: The appeal succeeded on limitation, so the disallowance was set aside, although the assessee did not succeed on the substantive Modvat entitlement issues.

Ratio Decidendi: Credit for inputs received before the dated acknowledgement of a Modvat declaration must be governed by Rule 57H and cannot be brought within Rule 57G; the extended period of limitation is unavailable where the relevant facts were disclosed in statutory records and suppression is not established.

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