Modvat credit on bleaching chemicals upheld where accepted textile industry norms provided a reliable basis for input quantification.

Modvat credit on bleaching chemicals used in fabric processing was treated as admissible where input consumption was quantified by accepted textile industry norms and no workable alternative basis for disallowance was shown. The Tribunal accepted BTRA/ATIRA processing norms, noted that they had been relied on in the assessee's earlier case, and relied on the Supreme Court's approach in Chandrapur Magnet Wires (P) Ltd. Separate input accounts in the form insisted upon by the Revenue were not required on these facts, and the credit was sustained.

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Issues: Whether credit on bleaching chemicals used in the processing of fabrics was admissible when the quantity of input attributable to dutiable final products was quantified on the basis of accepted textile industry norms and separate input accounts were not maintained in the manner contended by the Revenue.

Analysis: The claimed credit was supported by the textile processing norms published by BTRA/ATIRA, which had already been accepted in the assessee's own case for another period. The Revenue did not point to any workable alternative method for quantification if those norms were rejected. The Tribunal also found that the earlier view of the Supreme Court in Chandrapur Magnet Wires (P) Ltd. supported the approach adopted by the Commissioner (Appeals). On these facts, no illegality or irregularity was shown in allowing the credit.

Conclusion: The credit on the bleaching chemicals was held admissible and the Revenue's challenge failed.

Final Conclusion: The order allowing Modvat credit was sustained, and the Revenue's appeal was dismissed.

Ratio Decidendi: Where industry norms for input consumption have been accepted as a reliable basis for quantification, Modvat credit cannot be denied merely because separate accounts are not maintained in the form insisted upon by the Revenue, absent any contrary workable basis for disallowance.

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