Modvat credit eligibility turns on the date of receipt; later expansion of capital goods scope cannot validate prior claims.

Machines received before the relevant notification brought the finished product within the Modvat regime were not eligible capital goods for credit under Rule 57Q at the time of receipt. Eligibility had to be determined with reference to the position prevailing when the machines entered the factory, and a later amendment enlarging the scope of capital goods could not retrospectively validate an otherwise ineligible credit claim. The credit was therefore unavailable on the relevant date, and the revenue's appeal succeeded.

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Issues: Whether machines received before the relevant amendment could be treated as eligible capital goods for Modvat credit when the goods manufactured by them were notified only later.

Analysis: The machines were received before the notification which brought the finished product under the relevant Modvat regime. Eligibility under Rule 57Q had to be examined with reference to the time of receipt of the goods in the factory. Since Modvat credit was not available when the machines were received, subsequent amendment enlarging the scope of capital goods could not retrospectively confer eligibility on those machines.

Conclusion: The machines were not eligible for Modvat credit on the date of receipt, and later notification could not validate the credit claim; the revenue's appeal succeeds.

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