Modvat credit on imported copper alloy bar not barred for want of formal declaration where intimation and revenue-neutral clearance existed.

Modvat credit on imported copper alloy bar was treated as not automatically barred merely because a formal declaration under Rule 57G was not filed, where the assessee had already intimated the department of its intended credit availment and the goods were cleared as such after reversal of credit. The revenue-neutral nature of the transaction supported acceptance of the credit in principle. However, the Tribunal required verification of the invoices showing clearance by reversal of credit, as that factual basis had not been produced. The matter was therefore remanded for factual verification, with credit to be allowed if the documents establish the stated position.

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Issues: Whether Modvat credit on imported Copper Alloy Bar could be denied for want of a formal declaration under Rule 57G when the assessee had intimated the department and the goods were cleared as such by reversing the credit.

Analysis: The material was not used in the assessee's own manufacture but was cleared as such to customers after reversal of the credit. In that situation, the absence of a separate prescribed declaration was not treated as fatal, since the assessee had already informed the Assistant Commissioner by letter about the intended availment of credit and the transaction was revenue-neutral. However, the invoices evidencing clearance of the goods by reversal of the credit were not produced before the Tribunal, so verification of that factual aspect was necessary.

Conclusion: The denial of Modvat credit was not sustained in principle, but the matter was remanded to the Assistant Commissioner for verification of the invoices and for allowing the credit if the factual position is established.

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