Transitional Modvat credit under Rule 57H extends to qualifying inputs used before declaration acknowledgment, with credit allowed.

Rule 57H operated as a transitional provision to extend Modvat credit for duty-paid inputs where acknowledgment of the Rule 57G declaration had not yet been obtained. The provision covered both inputs lying in stock or received after filing the declaration and inputs already used in the manufacture of final products cleared from the factory on or after 1-3-1987. The Tribunal followed the cited High Court view that the second limb was not excluded merely because the declaration was filed later, so credit remained available for qualifying inputs. The denial of Modvat credit was therefore unsustainable, and the appellants were entitled to the credit under Rule 57H.

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Issues: Whether the appellants were entitled to Modvat credit under Rule 57H on inputs used in the manufacture of final products cleared before filing the declaration under Rule 57G, where the final products had been cleared on or after 1-3-1987.

Analysis: Rule 57H was a transitional provision intended to extend credit in respect of duty-paid inputs where the manufacturer had not yet obtained acknowledgment of the declaration under Rule 57G. The provision contained two limbs: one relating to inputs lying in stock or received after filing the declaration, and the other relating to inputs already used in the manufacture of final products cleared from the factory on or after 1-3-1987. The Tribunal followed the cited High Court view that the rule was designed to grant credit for such qualifying inputs and that the second limb was not excluded merely because the declaration had been filed later.

Conclusion: The appellants were entitled to Modvat credit under Rule 57H, and the denial of credit was unsustainable.

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