Modvat credit for capital goods cannot be denied solely for late declaration where receipt and use are undisputed.

Modvat credit on capital goods could not be denied merely because the declaration was filed late when the delay was limited to three months and the receipt and use of the goods in manufacture were undisputed. Under the amended Rule 57G, the Assistant Commissioner had discretion to condone delay, and the declaration requirement was procedural rather than substantive. Detailed reasons for condonation were not mandatory where the substantive conditions for credit were met. The reversal by the Commissioner (Appeals), based only on the absence of recorded reasons for condonation, was unsustainable, and the assessee remained entitled to the credit.

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Issues: Whether Modvat credit could be denied merely because the declaration in respect of capital goods was filed beyond the stipulated time, where the delay was within three months and the receipt and utilisation of the goods were not in dispute.

Analysis: Under the amended Rule 57G, the Assistant Commissioner had discretion to condone delay in filing the declaration. The requirement was procedural, and detailed reasons for condonation were not mandatory where the delay was limited and the substantive conditions for credit were satisfied. Since receipt of the capital goods in the factory and their use in manufacture of final products were established, credit could not be disallowed solely on the ground of late filing of the declaration. The reversal by the Commissioner (Appeals) on the ground of absence of reasons for condonation was unsustainable.

Conclusion: The denial of Modvat credit for late filing of the declaration was set aside, and the assessee was entitled to the credit.

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