Modvat credit through job workers cannot be denied where inputs were directly procured and the rules allowed such delivery.

Modvat credit under Rule 57A could not be denied merely because inputs procured directly from manufacturers under the compounded levy scheme were received through job workers instead of being physically brought first into the assessee's factory. Rule 57F(4), Rule 57J and Notification No. 58/97-C.E. (N.T.) were read as permitting direct delivery to job workers, and the notification could not be used to impose an additional restriction overriding the rules. The Board's circular and the liberal procedure for deemed credit supported this view, so physical receipt in the factory was not indispensable where procurement and payment were otherwise in the prescribed manner.

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Issues: Whether Modvat credit could be denied merely because the inputs, though procured directly from manufacturers operating under the compounded levy scheme, were received through job workers and not physically brought first into the assessee's factory.

Analysis: The credit claim was examined in the context of Rule 57A, Rule 57F(4) and Rule 57J of the Central Excise Rules, together with Notification No. 58/97-C.E. (N.T.) dated 30-8-1997. The governing rules permitted inputs to be delivered directly to job workers, and the notification could not be read as introducing a further restriction that would curtail the operation of the rules themselves. The Board's circular and the liberal procedure for deemed credit supported the position that physical receipt in the factory was not indispensable where the inputs were directly procured and paid for in the prescribed manner.

Conclusion: The credit could not be denied on the ground that the inputs were routed through job workers, and the impugned orders were unsustainable.

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