Modvat credit on duty paid after clearance upheld as permissible; amendment to Rule 57E treated as clarificatory.

Modvat credit was held admissible where additional duty on inputs was paid after clearance of the goods, despite the absence of an express pre-April 1987 provision in Rule 57E. The Larger Bench view applied Rule 57G to permit credit of duty paid subsequently on inputs, and treated the April 1987 amendment to Rule 57E as clarificatory rather than as creating the entitlement for the first time. On that basis, the later-paid duty was allowed to be taken as credit, and the objection based on the earlier wording of Rule 57E was rejected in favour of the assessee.

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Issues: Whether Modvat credit was admissible on inputs where additional duty was paid after clearance of the goods, notwithstanding the absence of an express provision in Rule 57E before its April 1987 amendment.

Analysis: The issue was treated as settled by the Larger Bench decision holding that, even before the amendment, credit of duty paid subsequently on inputs could be availed under Rule 57G. The amendment to Rule 57E was regarded as clarificatory and not as creating the entitlement for the first time. On that basis, the additional duty paid later by the manufacturer could be taken as credit by the appellant.

Conclusion: Modvat credit was admissible, and the objection based on the pre-amendment wording of Rule 57E was rejected in favour of the assessee.

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