Timely Rule 57T declaration after factory registration sustained Modvat credit on capital goods despite earlier machinery receipt.

Modvat credit on capital goods was allowed because the declaration under Rule 57T(1) was filed within the prescribed period counted from factory registration, not from earlier receipt of the machinery. The finding that a factory comes into legal existence only on Central Excise registration was upheld, so the assessee's declaration shortly after registration was treated as timely. A Board circular dealing with cases where registration had not yet been obtained was held to operate prospectively and did not override the assessee's compliance on the facts found. The Revenue's reliance on earlier receipt of the goods was rejected.

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Issues: Whether the assessee was entitled to Modvat credit on capital goods when the declaration under Rule 57T(1) was filed after receipt of the goods but within time from the date of Central Excise registration of the factory.

Analysis: The Commissioner's finding was upheld that the factory, for the purpose of the Central Excise law, came into existence only upon registration and that the declaration filed shortly thereafter was within the prescribed period. The Board circular relied upon by the Revenue clarified the position for cases where registration had not yet been obtained, but it operated prospectively and did not displace the assessee's timely compliance on the facts found. The Revenue's reliance on the earlier receipt of machinery was rejected because the factory had not legally come into existence at that stage.

Conclusion: The declaration was not time-barred and the assessee was entitled to Modvat credit on the capital goods.

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