Modvat credit for intermediate products cannot be denied where inputs are accounted for and the final product is duty paid.

Modvat credit on inputs cannot be denied merely because an intermediate plastic container was not separately disclosed in the Rule 57G declaration or because the goods were sent to job workers without separate permission. The declaration identified the inputs and the final product as detergent paper, while the plastic containers arose only at an intermediate stage. The record also showed that the inputs sent for job work were received back and the final product was cleared on payment of duty. As the disputed article was only an intermediate product and the inputs were properly accounted for, denial of credit was unwarranted.

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Issues: Whether Modvat credit on inputs could be denied on the ground that the declaration did not specifically disclose the intermediate plastic containers and that the goods were sent to job workers without permission.

Analysis: The declaration under Rule 57G disclosed the inputs and the final product as detergent paper, while the plastic containers emerged only at an intermediate stage. The record showed that the inputs sent for job work were received back and that the final product was cleared on payment of duty. In view of the earlier authorities treating such containers as intermediate products and permitting credit where duty is paid on the final products, the omission urged by the Revenue did not justify denial of credit.

Conclusion: Modvat credit could not be denied, and the Revenue's appeal was without merit.

Ratio Decidendi: Where inputs are used in the manufacture of a duty-paid final product and the disputed article is only an intermediate product, Modvat credit cannot be denied merely because the intermediate stage was not separately disclosed or job-work clearance was not separately objected to when the inputs were duly accounted for and returned.

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