Transitional Modvat credit under Rule 57H is available without prior permission when statutory conditions are otherwise satisfied.

Rule 57H permits transitional Modvat credit on duty-paid inputs received immediately before the dated acknowledgment of a Rule 57G declaration, provided the Assistant Collector is satisfied that the prescribed conditions are met. Prior permission is not expressly required, and credit cannot be denied merely because the entry was made one day before acknowledgment where the inputs were in stock, used in manufacture, and no disqualifying factor was shown. The provision is intended to avoid disruption of production and should not be applied rigidly to defeat eligible credit. On that basis, the credit was upheld and recovery was not justified.

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Issues: Whether Modvat credit on inputs lying in stock before filing the declaration under Rule 57G could be taken under the transitional provisions of Rule 57H without prior permission of the Assistant Collector, and whether recovery of such credit was sustainable.

Analysis: Rule 57H permits credit of duty paid on inputs received immediately before obtaining the dated acknowledgment of the declaration under Rule 57G, if the Assistant Collector is satisfied that the prescribed conditions are fulfilled. The absence of an express requirement of prior permission is material. Where the inputs were in stock, were used in the manufacture of final products, and no other disqualifying factor was shown, the credit could not be denied merely because the entry was made one day before the dated acknowledgment. The transitional provision is intended to prevent disruption of production and is not to be construed so rigidly as to require waiting for prior permission when the statutory conditions are otherwise met.

Conclusion: The credit was rightly allowed and recovery was not justified; the Revenue's appeal failed.

Final Conclusion: Transitional Modvat credit under Rule 57H was available on fulfilment of the prescribed conditions even without prior permission, and the order granting credit was upheld.

Ratio Decidendi: Where Rule 57H does not stipulate prior permission, Modvat credit on eligible inputs received immediately before the dated acknowledgment of the Rule 57G declaration cannot be denied if the statutory conditions for the Assistant Collector's satisfaction are otherwise fulfilled.

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