Transitional Modvat credit under Rule 57H(1) remained available for inputs received after declaration, even after processing.

Rule 57H(1), as amended from 5-5-1989, operated as a transitional provision overriding Rule 57G and used two disjunctive categories: inputs lying in stock and inputs received in the factory after filing the declaration. Credit was therefore available for inputs received after the declaration even if they were not lying in stock as such and had been processed or used in manufacture. The omission of clause (ii) did not remove this entitlement, and the earlier contrary view was treated as having overlooked the second alternative in the rule. For the relevant period, transitional Modvat credit remained available on that basis, subject to proof that the inputs were received after the declaration.

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Issues: Whether Rule 57H(1), as amended with effect from 5-5-1989, permitted Modvat credit for inputs received after filing the declaration under Rule 57G even if those inputs were not lying in stock as such and had been processed or used in the manufacture of final products.

Analysis: Rule 57H(1) is a transitional provision operating notwithstanding Rule 57G. The text of the amended rule contains two separate alternatives linked by the word "or": inputs lying in stock, and inputs received in the factory after filing the declaration. The two alternatives operate disjunctively and relate to different categories of goods. The omission of clause (ii) did not alter the position that credit could still be claimed where inputs were received after filing the declaration under Rule 57G, even if they had moved into process or formed part of finished products. The earlier contrary view was treated as having been rendered without examining the second alternative in the rule.

Conclusion: Rule 57H(1), during the period from 5-5-1989 to 25-7-1991, allowed transitional Modvat credit in respect of inputs received after filing the declaration under Rule 57G, whether or not they remained in stock as such. The Revenue's challenge in one matter failed, and the remaining matters required reconsideration on the factual question whether the inputs had been received after filing the declaration.

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