Modvat credit under Rule 57H need not await prior permission where approval is unreasonably delayed or not refused.

Modvat credit under Rule 57H was treated as allowable where an application for permission had been made and no refusal had been recorded. The phrase "may allow" was read as requiring the Assistant Collector to examine the prescribed conditions, but not as making prior permission an absolute precondition in every case. Permission could not be withheld without valid reasons or delayed unreasonably, and availment of credit in anticipation of permission was not invalid merely because formal approval had not yet issued. On that basis, the denial of credit was set aside and the assessee's credit claim was upheld.

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Issues: Whether Modvat credit under Rule 57H of the Central Excise Rules could be taken without prior permission of the Assistant Collector and whether denial of the credit was sustainable.

Analysis: Rule 57H provided for allowance of credit by the Assistant Collector on satisfaction of the prescribed conditions, but the language "may allow" did not justify treating prior permission as an absolute precondition in every case. The grant of permission could not be withheld without valid reasons or delayed unreasonably, and where an application had been made and no refusal had been recorded, availment of credit in anticipation of permission was not to be faulted. The Tribunal's earlier decisions had already taken the view that the absence of prior permission did not by itself defeat the credit claim.

Conclusion: The taking of Modvat credit was held to be in order, and the denial of credit in the impugned order was set aside in favour of the assessee.

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