Modvat credit cannot be denied for a procedural declaration defect when facts are disclosed and limitation is not available.

Modvat credit was treated as admissible where the Rule 57G declaration and invoice particulars substantially matched the input and final product descriptions, the inputs were admittedly received and used, and the duty-paid nature of the goods was not disputed. A procedural defect in the declaration, including use of the buyer's copy of the invoice, was condonable in light of the binding circular then in force, so credit could not be denied on that basis. The demand was also held time-barred because the record showed disclosure through statutory returns and declarations, leaving no basis for the extended limitation period, and the connected penalty and confiscation were unsustainable.

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Issues: Whether Modvat credit could be denied on the ground of imperfect declaration under Rule 57G and use of buyer's copy of invoice, and whether the demand, penalty and confiscation were barred by limitation in the absence of suppression or intent to evade duty.

Analysis: The declaration under Rule 57G and the invoice particulars substantially matched the input and final product descriptions, and the tariff heading for the input showed no discrepancy. The department did not dispute receipt, use, or duty-paid nature of the inputs. The Board's circular in force at the time prohibited issuance of show-cause notice merely for a procedural lapse in filing the declaration, and the defect in the declaration was therefore condonable. The record also showed disclosure of material facts through RT-12 returns, Rule 52A invoices and Rule 173B declarations, so the ingredients for invoking the extended period under Rule 57-I(1)(ii) were absent. The same limitation bar applied to credit taken on the basis of the original invoice copy.

Conclusion: The Modvat credit was admissible, the demand was time-barred, and the orders of penalty and confiscation were unsustainable.

Ratio Decidendi: A Modvat credit claim cannot be denied for a merely procedural defect in declaration when the material facts are disclosed, the inputs are admittedly received and used, and a binding Board circular prohibits action on that ground; in such circumstances, the extended period of limitation is not available.

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