Modvat credit under Rule 57H cannot be denied where inputs were in stock and later used in manufacture.

Modvat credit could not be denied merely because the Rule 57H declaration was filed after the Rule 57G declaration, where the duty-paid inputs were already in stock on the relevant date and were subsequently used in manufacture. Rule 57H covered inputs received immediately before the dated acknowledgement under Rule 57G, and the appellants entered the Modvat scheme only upon filing the Rule 57G declaration, so no prior Rule 57H filing was required. As the Rule 57H declaration was filed within six months of the Rule 57G declaration and credit was taken only thereafter, the requirements of Rule 57H were met and denial of credit was unsustainable.

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Issues: Whether Modvat credit could be denied merely because the declaration under Rule 57H was filed after the declaration under Rule 57G, when the inputs were lying in stock and were subsequently used in manufacture.

Analysis: Rule 57H enabled credit on duty-paid inputs received immediately before obtaining the dated acknowledgement under Rule 57G, if the inputs were lying in stock or were used in the manufacture of final products cleared after the relevant date. The inputs in question were admittedly in stock on the relevant date, and there was no material to dislodge the contention that they were also used in manufacture. The appellants came within the Modvat scheme only upon filing the Rule 57G declaration, so the filing of a prior Rule 57H declaration did not arise. The declaration under Rule 57H was filed within six months of the Rule 57G declaration, and credit was taken only thereafter.

Conclusion: The appellants satisfied the requirements of Rule 57H and were entitled to Modvat credit; the denial of credit was unsustainable.

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