Modvat credit cannot be denied for an improper declaration when duty-paid inputs are recorded and used in manufacture.

Modvat credit could not be denied on a merely technical objection where the inputs were received under proper duty-paying documents, entered in statutory records, and used in manufacture of final products. Rule 57G(11) of the Central Excise Rules, 1944, as amended, protected credit despite an imperfect declaration if those substantive conditions were met. The declaration here broadly described iron and steel scrap, and the records showed the goods received were iron and steel scrap from old ships. Credit was therefore admissible, and denial was unjustified.

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Issues: Whether Modvat credit could be denied merely for non-filing of a proper declaration when the inputs were received under duty-paying documents, were recorded in the statutory records, and were used in the manufacture of finished goods.

Analysis: The declaration had been filed in broad description for iron and steel scrap, and the records showed that the goods actually received were iron and steel scrap from old ships. Rule 57G(11) of the Central Excise Rules, 1944, as amended, embodied that credit should not be denied on the ground of an improper declaration where the assessee had received the goods on proper duty-paying documents, maintained the prescribed records, and used the goods in the manufacture of final products. Since these conditions were satisfied, the objection was only technical and did not justify denial of credit.

Conclusion: The denial of Modvat credit was unjustified and the assessee was entitled to the credit.

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