Modvat credit entitlement: delayed Rule 57H regularisation did not bar credit where inputs qualified under the earlier proforma scheme.

Modvat credit on inputs received before filing the Rule 57G declaration could not be denied merely because regularisation under Rule 57H was sought later, where the inputs and final products were undisputed and the assessee was otherwise entitled to proforma credit under the earlier Rule 56A regime. The 31-1-1986 cut-off was held inapplicable to inputs that would have qualified under the pre-existing scheme, so the limitation objection became irrelevant once substantive admissibility was established. The commentary concludes that delayed regularisation alone does not defeat entitlement when credit is otherwise allowable on merits.

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Issues: Admissibility of Modvat credit on inputs received before filing the declaration under Rule 57G and whether delay in seeking regularisation under Rule 57H, or prior payment of duty before 31-1-1986, barred such credit.

Analysis: Rule 57H governed credit on inputs received before the declaration under Rule 57G. The credit could not be denied merely because the regularisation request was filed later, where the relevant inputs and final products were not in dispute and the assessee was otherwise entitled to proforma credit under Rule 56A before the Modvat scheme commenced on 1-3-1986. The cut-off date of 31-1-1986 was not applicable to inputs for which credit had been allowable under the earlier scheme, and the objection based on limitation became irrelevant once the credit was found admissible on merits.

Conclusion: The credit was admissible and the assessee succeeded on merits.

Ratio Decidendi: Where credit on inputs was otherwise admissible under the pre-existing proforma credit regime, the Rule 57H cut-off date could not be invoked to deny Modvat credit, and delayed regularisation by itself did not defeat substantive entitlement.

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