Modvat credit cannot be denied for chapter heading mismatch where inputs were received, described correctly and used in manufacture.

Modvat credit could not be denied merely because the chapter headings in the declaration differed from those in the suppliers' invoices, where the inputs were received, correctly described and used in manufacture. The mismatch was only a technical discrepancy and did not affect substantive eligibility. The Board's circular and the amendment to Rule 57G supported allowance of credit even for the prior period. Credit was therefore admissible, and the denial was set aside.

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Issues: Whether Modvat credit could be denied merely because the chapter headings mentioned in the declaration differed from the headings shown in the suppliers' invoices, when the inputs were received, correctly described, and used in the manufacture of final products.

Analysis: The receipt and utilisation of the inputs were not in dispute, and the descriptions of the inputs in the declaration were also not challenged. The only basis for denial was the difference in chapter headings between the declaration and the invoices. The applicable legal position, as reflected in the Board's circular and the amendment to Rule 57G, was that credit was not to be denied merely for such omission or mismatch of details in the declaration. The later amendment was treated as supporting the admissibility of credit even for the prior period in question.

Conclusion: Modvat credit was admissible and could not be denied solely on the ground of discrepancy in chapter headings between the declaration and the suppliers' invoices.

Final Conclusion: The impugned denial of credit was set aside and the assessee's entitlement to Modvat credit on both inputs was upheld.

Ratio Decidendi: A Modvat credit claim cannot be rejected merely because the declaration contains a different chapter heading from the supplier's invoice, where the inputs are duly received, correctly described, and used in manufacture, and the discrepancy does not affect substantive eligibility.

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