Modvat credit on merger: procedural lapse in declaration could not defeat substantive entitlement where department had notice.

Modvat credit lying unutilised in the account of a merged company could not be denied to the successor assessee merely for not filing a declaration under Rule 57H before utilisation or for not seeking prior departmental approval. The merger was undisputed, the department had been informed promptly, the registration certificate was amended, and the earlier declarations and documents were requested to be treated as those of the successor. Because the department had the relevant information and no prejudice was shown, the omission was only procedural and technical. The denial of credit and the related penalty were therefore not sustainable, and the assessee was entitled to the credit.

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Issues: Whether Modvat credit lying unutilized in the account of a company that had merged with the assessee could be denied merely because the assessee did not file a declaration under Rule 57H before utilising the credit and did not seek prior approval from the department.

Analysis: The merger was not in dispute and the department had been promptly informed. The assessee obtained amendment of the registration certificate and also communicated that the earlier declarations and documents of the merged company be treated as those of the successor company. The omission to file the declaration in the prescribed form did not affect the substantive entitlement, since the department had all necessary information and no prejudice was shown. The lapse was only procedural and technical, and the credit could not be denied on that ground alone.

Conclusion: The denial of Modvat credit and the related penalty were not sustainable; the assessee was entitled to the credit.

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