Transitional Modvat credit under Rule 57H prevails over Rule 57G limits for pre-April gate passes.

Rule 57H preserved transitional Modvat credit for inputs received immediately before filing the declaration, and sub-rule (1B) operated notwithstanding Rule 57G. Gate passes issued before 1 April 1994 remained valid supporting documents under this scheme, even though gate passes were discontinued for future transactions. Notification 16/94, framed under Rule 57G and limiting certain document-based credit to 30 June 1994, could not override the distinct enabling mechanism in Rule 57H. The result was that credit on such inputs was admissible and denial of Modvat credit was unsustainable.

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Issues: Whether Modvat credit on inputs covered by gate passes issued before 1 April 1994 could be taken after 30 June 1994 under Rule 57H of the Central Excise Rules, 1944, notwithstanding the limitation in Notification 16/94 issued under Rule 57G.

Analysis: Rule 57H contained a specific enabling provision permitting credit on inputs received immediately before filing the declaration, and its sub-rule (1B) operated notwithstanding Rule 57G. The proviso to Rule 57H expressly contemplated gate passes and similar documents even though gate passes had been discontinued for future transactions, showing that the rule was intended to preserve credit in the transitional situation. Notification 16/94, which restricted credit on certain documents to 30 June 1994, was issued in the context of Rule 57G and could not override the distinct scheme of Rule 57H.

Conclusion: The credit was admissible under Rule 57H, and the denial of Modvat credit was unsustainable.

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