Modvat credit on capital goods cannot be denied for procedural declaration defects where duty-paid use is undisputed; remand ordered.

Modvat credit on capital goods was held not to be denied merely because the declaration quoted the wrong rule or was absent, where the goods were correctly described, duty-paid, and used in the factory. The defect was treated as procedural rather than substantive, and the liberalised Modvat regime under Notification No. 7/99-C.E. (N.T.) was considered relevant to fresh examination. The denial of credit was set aside and the matter was remanded for de novo adjudication, including whether non-filing of declaration could be condoned and whether depreciation under the Income-tax Act had been taken.

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Issues: Whether Modvat credit on capital goods could be denied for wrong or absent declaration under the relevant Modvat provisions, and whether the matter should be remanded for fresh consideration.

Analysis: The declarations covering the capital goods described the goods correctly, but in some cases the wrong rule was quoted. The defect was treated as procedural rather than substantive, especially since there was no dispute about the duty-paid character of the capital goods or their use in the factory. The liberalised Modvat regime introduced by Notification No. 7/99-C.E. (N.T.) dated 09-02-1999 was also taken into account, and the matter was considered fit for fresh examination, including the question whether non-filing of declaration could be condoned and whether depreciation under the Income-tax Act had been taken.

Conclusion: The denial of credit was set aside and the matter was remanded for de novo adjudication on admissibility of Modvat credit.

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