1994 (10) TMI 160

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....ion No. 17/88, dated 1-3-1988 the rate of credit was enhanced from Rs. 320/- PMT to Rs. 640/- PMT. The respondents were denied credit at the rate of Rs. 640/- PMT on the stocks lying in their factory as on 1-3-1988. Collector (Appeals) however set aside the order of the Assistant Collector and allowed the appeal on the ground that rate of Modvat credit is the rate prevalent on the date such inputs are utilised for manufacture of final products. Hence this appeal. 2.1 It was submitted by Ld. DR on behalf of the Revenue that the credit is allowed in the accounts maintained by the factory at a rate in force on the date the inputs were received by the factory. Ld. Manager (Tax) on behalf of the respondent submitted that what is relevant....

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.... differential duty was subsequently paid. The credit claim is governed by the provisions of Rule 57K read with notification issued thereunder. Rule 57K allows grant of modvat credit for use of inputs in the manufacture of final products. Sub-rule (2) to Rule 57A permits allowing of credit, and then utilisation of such credit for payment of duty on the final products. Notification refers to grant of credit and utilisation of this credit for the purposes of Section AAA of Chapter 5. Credit therefore is allowed to be taken into account maintained for the purpose as soon as the oil is received in the factory. The credit however is allowed to be utilised for payment of duty on the final product only after such input is actually utilised in the m....