Modvat credit and job-worker return period: trade notice could not impose an unauthorized time limit, with remand for verification.

Modvat credit could not be denied for inputs sent to a job worker before Notification No. 25/96 came into force, because a trade notice could not impose a 60-day return requirement without authority under the rule. The record also did not clearly establish the extent of any delay, and Rule 57-I was not an appropriate basis for the demand on these facts. The matter required verification of whether the processed inputs were actually received back by the appellant, and the demand could not be sustained on the existing record.

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Issues: Whether the demand of duty by disallowing Modvat credit could be sustained on the basis of Notification No. 25/96 and a trade notice in respect of inputs sent to a job worker before the notification came into force, and whether the matter required remand for verification of receipt of processed inputs.

Analysis: The inputs were despatched to the job worker during a period preceding the commencement of the notification prescribing receipt back within 60 days. In the absence of authority under the relevant rule, a trade notice could not be used to impose a time limit not otherwise provided by the rule. The notice also did not clearly establish the extent of delay beyond the stipulated period. The reasoning further noted that Rule 57-I was not an appropriate basis for the demand in such a case, and that the jurisdictional authority had to verify whether the processed inputs were in fact received back by the appellant.

Conclusion: The demand could not be sustained on the existing record, and the impugned order was set aside with a remand for verification of proper receipt of the inputs after processing; if receipt was established, no duty demand would survive.

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