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Issues: Whether Modvat credit taken before filing the declaration under Rule 57G could be sustained by invoking Rule 57G(5) of the Central Excise Rules, 1944, when the credit had already been availed and utilised before the delayed declaration and the application for condonation was filed much later.
Analysis: The credit of Rs. 20,662/- was taken on 31-7-1995, whereas the declaration covering the inputs was filed only on 5-8-1995 and received by the proper officer on 14-8-1995. The declaration itself did not state that the inputs had already been received. Rule 57G(5) permits belated declaration and condonation of delay only where the manufacturer is not in a position to make the declaration in time and the proper officer is satisfied about the prescribed conditions. The show cause notice proceeded on recovery of credit already utilised under Rule 57I(ii), showing that the credit had already been taken and used before the application for condonation, which was made only on 22-1-1996. In those circumstances, Rule 57G(5) was held inapplicable.
Conclusion: The credit was not allowable and its denial was upheld against the assessee.
Ratio Decidendi: Rule 57G(5) cannot be invoked to regularise Modvat credit that has already been taken and utilised before filing the declaration and before seeking condonation of delay.
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