Modvat credit on capital goods can be utilised from receipt in a running factory, without waiting for plant commissioning.

In an already running factory, Modvat credit on eligible capital goods under Rule 57Q could be taken and utilised from the date the goods were received for expansion or modernisation. Utilisation did not have to wait until the new furnace or plant was actually put to use, as the operative timing depended on receipt of the capital goods in a functioning unit. The commentary follows earlier Tribunal rulings and the Board's clarification supporting immediate availment in such circumstances.

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Issues: Whether Modvat credit in respect of capital goods could be utilised before the capital goods were actually put to use in the installed furnace of an already running factory.

Analysis: The dispute turned on the timing of availment and utilisation of Modvat credit under Rule 57Q of the Central Excise Rules. The factory was already engaged in manufacture and the goods were received for expansion and modernisation. The decision relied on earlier Tribunal rulings and the Board's circular clarifying that where the factory is already running, credit may be utilised from the date of receipt of the goods and not only after the new furnace begins operation.

Conclusion: The utilisation of Modvat credit from the date of receipt of the goods was held to be valid and the issue was decided in favour of the assessee.

Ratio Decidendi: In an already running factory, Modvat credit on eligible capital goods may be taken and utilised from the date of receipt of the goods, and utilisation need not wait until the new plant or furnace actually starts operating.

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