Capital goods credit could not be denied for alleged declaration lapse where the rule itself imposed no such requirement.

Credit of duty on capital goods used in initial setting up by a contractor or job worker could not be denied merely for alleged non-filing or delayed filing of a declaration, because Rule 57-T of the Central Excise Rules, 1944 did not itself prescribe the declaration requirement relied upon by revenue. The disallowance was therefore based on an incorrect legal assumption, and the invoices also showed that duty had been paid by the manufacturers supplying the goods, not by the contractor or job worker. On that basis, the denial of credit was unsustainable and consequential relief followed.

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Issues: Whether credit of duty paid on capital goods could be denied for alleged non-filing or delayed filing of a declaration under Rule 57T(7) of the Central Excise Rules, 1944.

Analysis: The credit scheme for capital goods used in initial setting up by a contractor or job worker was governed by Rule 57-T of the Central Excise Rules, 1944. The rule, on its terms, did not prescribe any declaration requirement of the kind relied upon by the revenue authorities. The adjudication and appellate orders proceeded on the mistaken assumption that such a declaration was mandatory, even though no specific trade notice or public notice was shown to have been applied in the orders. The invoices also showed that the duty had been paid by manufacturers supplying the items, and not by the contractor or job worker, so the factual basis for the disallowance was incorrect.

Conclusion: The denial of credit was unsustainable, and the assessee was entitled to the credit and consequential relief.

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