Modvat credit on capital goods denied for dealer-supplied receipt and belated declaration under Rule 57T.

Modvat credit on capital goods under Rule 57T of the Central Excise Rules, 1944 was denied where the goods were received through dealers rather than directly from the manufacturer and the prescribed declaration was filed late. The amendment introduced by Notification No. 23/94-C.E. (N.T.) dated 20-5-1994 was treated as prospective, so the earlier restrictive conditions continued to apply to the goods in question. The lapse was held not to be a mere procedural defect because the statutory requirements for availing credit were not satisfied. Accordingly, credit was not admissible and the Revenue's appeal succeeded.

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Issues: Whether Modvat credit on capital goods was admissible when the goods were received through dealers instead of directly from the manufacturer and the declaration was filed belatedly.

Analysis: The credit claim was governed by Rule 57T of the Central Excise Rules, 1944, which at the relevant time required capital goods to be received directly from the manufacturer and required timely declaration. The respondents had received the diesel engine set through dealers, and the declaration reached the jurisdictional office only later. The amendment brought by Notification No. 23/94-C.E.(N.T.) dated 20-5-1994 was held to apply only from that date, so the earlier restrictive requirement continued to govern the goods in question. The view that the lapse was merely procedural was rejected because the statutory conditions for availment of credit were not complied with.

Conclusion: Modvat credit was not admissible, and the Revenue's appeal succeeded.

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