Modvat credit cannot be denied for procedural description defects when duty-paid inputs were received, used, and accepted by the department.

Modvat credit cannot be denied merely because the declaration of inputs used a general description rather than item-wise particulars, where the declaration had already been accepted by the department and duty-paid inputs were received and used without dispute. The governing notification and Board circular were applied to treat the defect as procedural, not substantive. Credit on special excise duty also could not be denied on a ground not raised in the show cause notice, as that objection had no basis in the proceedings. The order disallowing credit was set aside and relief followed.

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Issues: (i) Whether Modvat credit could be denied merely because the declaration of inputs contained a general description instead of item-wise specific particulars, when duty-paid inputs were received and used. (ii) Whether credit on special excise duty could be denied on the basis of a finding not raised in the show cause notice.

Issue (i): Whether Modvat credit could be denied merely because the declaration of inputs contained a general description instead of item-wise specific particulars, when duty-paid inputs were received and used.

Analysis: The declaration of inputs had been filed and accepted by the departmental authorities without objection. Once a general description was accepted at the declaration stage, the same could not be treated as unacceptable at the stage of allowing credit. The governing notification and Board circular further indicated that credit was not to be denied for mere procedural non-compliance where there was no dispute about duty payment on the inputs or their receipt and use.

Conclusion: Credit could not be denied on the ground of general description alone, and the issue was decided in favour of the assessee.

Issue (ii): Whether credit on special excise duty could be denied on the basis of a finding not raised in the show cause notice.

Analysis: The objection regarding higher notional credit on special excise duty was not supported by the notice and had no basis to sustain the denial of credit in the present proceedings.

Conclusion: The objection was rejected, and it did not justify denial of credit.

Final Conclusion: The order denying credit was set aside and the assessee's appeal was allowed with consequential relief.

Ratio Decidendi: Modvat credit cannot be denied for a mere procedural defect in the description of inputs where duty payment, receipt, and use of the inputs are undisputed and the departmental authorities had already accepted the declaration.

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