NEW YORK — ON BORROWED TIMEComic fantasy by Paul Osborn, based on the novel by L. E. Watkin. Directed by and starring George C. Scott. At the Circle in the Square Theatre through Jan. 5. MORE than half a century since it first beguiled New York audiences, "On Borrowed Time" has returned to Broadway to work once more its mellow charms and demonstrate its enduring appeal. The admirable cast at the Circle in the Square Theatre is headed by George C. Scott, who also staged the revival. As Julian Northrup, Mr. Scott proves a worthy successor to such earlier portrayers of Gramps as Dudley Digges, who created the role in 1938, Lionel Barrymore (in the screen version), and Victor Moore, who star red in the 1953 New York revival. Paul Osborn pursued parallel themes in the tale about the relationship between Gramps (Mr. Scott) and his suddenly orphaned grandson Pud (Matthew Porac). In an immediate sense, death takes a holiday for most of the play. In a larger sense, Osborn calls on a Biblical theme that has inspired earlier poets - that "death shall have no dominion." When the time comes, Gramps and Pud, rather than making a final exit, experience a transition. Meanwhile, Osborn has been entertaining his audience with a funny, fanciful, sometimes tense tale of how Gramps tricks Mr. Brink (Nathan Lane), the self-composed figure of death, up an apple tree and holds him there by a magic spell. The rest is philosophical and theatrical make-believe. For as long as Mr. Brink remains treed, no living creature on earth can die. The situation creates local and eventually universal havoc until Gramps relents. Mr. Scott and his fine company of actors treat the fantasy with the air of complete conviction that insures its believability for even a skeptical latter-day audience. The director has made one concession to the heightening of credibility by placing the time of the action on "a late summer's day before the Great War" (1914-18) to reflect the attitudes of a more naive era. If nothing else, the shift enhances picturesqueness, as seen particularly in Holly Hynes's attractive period costumes. Otherwise, the director-star plays eminently fair with the text. In Playbill, Scott is quoted as saying: "There's a kind of sweetness to it, a real old-fashioned charm." He and his fellow actors respond to both qualities. So do the designers: Marjorie Bradley Kellogg, who uses the Circle in the Square stage spaces inventively (including a magnificently sculptured apple tree), and Mary Jo Dandlinger, whose lighting opts for subtle effects. Central to the play's irresistible impact is, of course, the relationship between Gramps and Pud. The bearded, gravel-voiced Scott bestows on Gramps all the requisite qualities of a mischievous oldster who is nevertheless determined to instill in Pud some basic human values. As Pud, young Porac creates the image of the winsomely engaging and spunky little lad who shares his grandpa's spectral adventure. As the comically dragonish Demetria, Bette Henritze gives one of her finest comic performances. She cuts a wide swath through the proceedings. Mr. Lane relies on gentlemanly understatement to emphasize Brink's credentials. Dark-suited and bespatted, the actor adds the necessary mystical note to a play whose content ranges from tender sentimentality to farce. Teresa Wright is the essence of fragility as Pud's Granny, whom Mr. Brink "calls" near the beginning of the play. The cast also includes Alice Haining as the Northrups' gentle family servant, Conrad Bain as the doctor who first begins to comprehend what is happening, as well as George DiCenzo, Joseph Jamrog, and Allen Williams. For Paul Osborn, George C. Scott and his fellow actors, "On Borrowed Time" is a timeless triumph.