Timely capital goods credit declaration during factory set-up was upheld where the legal position remained uncertain.

Declarations for capital goods credit under Rule 57Q were treated as timely where they were filed while the factory was still being established and the legal position was unclear. Registration under the excise framework was linked to commencement of manufacturing activity, and the Tribunal applied its earlier view that, in such a grey area, denying credit would be unjust. The declaration was therefore not treated as delayed, and the assessee was held entitled to the Rule 57Q benefit.

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Issues: Whether the declaration for capital goods credit under Rule 57Q of the Central Excise Rules, 1944 was filed within time when the factory was in the process of establishment and the legal position on such declarations was unclear.

Analysis: The factory's existence and the relevant dates of registration and receipt of capital goods showed that the declarations were filed during the period when the factory was being set up. Section 2(e) of the Central Excises and Salt Act, 1944 and Rule 174 of the Central Excise Rules, 1944 were relied upon to show that registration is linked with commencement of manufacturing activity. The Tribunal followed its earlier view that, in the then prevailing grey area regarding declarations by a factory under establishment, denial of credit would cause injustice and the declaration should not be treated as delayed.

Conclusion: The declaration was treated as filed in time and the appellant was entitled to the benefit of Rule 57Q.

Ratio Decidendi: Where the legal position concerning declarations for capital goods credit during the establishment of a factory was uncertain, the declaration should be treated as timely so as not to deny the substantive benefit of credit.

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