Modvat credit allowed where duty was later paid before receipt of inputs, with Range Superintendent's certificate accepted as proof.

Rule 57E permitted Modvat credit where duty was paid on the inputs before their receipt in the factory, even though the goods had originally been cleared for export without duty under bond. The crucial factor was actual payment of duty prior to receipt, and the certificate issued by the jurisdictional Range Superintendent was accepted as valid proof of that payment. As no other non-compliance with the Modvat scheme was established, denial of credit was unsustainable and the appellant was entitled to Modvat credit.

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Issues: Whether Modvat credit could be denied when the goods were originally cleared for export without payment of duty but, before receipt in the appellant's factory, duty was subsequently paid and evidenced by a certificate of the jurisdictional Range Superintendent.

Analysis: Rule 57E was held to cover variation in credit where duty is subsequently paid before receipt of the inputs, even if the goods were originally cleared at nil rate for export under bond. The decisive consideration was that duty had in fact been paid on the goods before they were received by the appellant, and the certificate issued by the Range Superintendent furnished valid evidence of such payment. No other non-compliance under the Modvat scheme was established by the revenue.

Conclusion: The appellant was entitled to Modvat credit and the denial of credit was unsustainable.

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