Modvat credit on paints could not be denied for one month when the same benefit was allowed before and after.

Modvat credit on paints could not be denied for a limited month when the same credit had been allowed for the surrounding periods. The inputs were used in the manufacture of the finished goods, and no valid basis was shown for treating one period differently from another. The denial of credit was therefore held unjustified, the Modvat credit disallowance was set aside, and relief was granted to the assessee.

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Issues: Whether Modvat credit on paints could be denied for a limited period when the same credit had been allowed for the earlier and later periods.

Analysis: The denial of credit was found unjustified because the inputs in question were used in the manufacture of the finished goods and there was no basis for treating one month differently when the department had allowed the same benefit for the surrounding periods.

Conclusion: The denial of Modvat credit was set aside and relief was granted to the assessee.

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