Modvat credit on subsequently paid duty upheld; Rule 57E certificate requirement inapplicable for the earlier period.

Modvat credit was held admissible where duty on inputs received under Chapter X was paid subsequently and the inputs were later used for a different purpose. The absence of a departmental direction requiring such payment was treated as irrelevant, because Rule 57E turned on the fact of subsequent duty payment. The certificate requirement in Rule 57E(4) was held inapplicable to the relevant period, since that sub-rule operated only from 1-3-1997 and the dispute pre-dated it. Earlier Tribunal decisions on Chapter X and GP-2 covered inputs supported the same approach, so the Revenue's challenge failed.

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Issues: Whether Modvat credit was admissible on differential duty paid subsequently in respect of inputs initially received under Chapter X but later used for a different purpose, and whether the certificate requirement under Rule 57E(4) could be invoked for the relevant period.

Analysis: The duty on the inputs was in fact paid subsequently, and that circumstance entitled the assessee to Modvat credit under Rule 57E. The distinction sought to be made that no departmental direction had been issued for payment was held to be irrelevant. The certification requirement under Rule 57E(4) was not applicable to the period in dispute, since that sub-rule came into force only from 1-3-1997, whereas the relevant period was earlier. The issue was also covered by earlier Tribunal decisions applying Rule 57E to inputs received under Chapter X procedure and covered under GP-2.

Conclusion: Modvat credit was admissible and the Revenue's challenge failed.

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