Procedural lapse in CENVAT declaration does not defeat credit where duty-paid capital goods and manufacturing use are established.

Delayed filing of the declaration and non-installation of capital goods before availing balance CENVAT credit were treated as procedural lapses, not a basis to deny credit where receipt of duty-paid capital goods in the factory and their use in manufacture were otherwise undisputed; the credit denial on these grounds was therefore not sustainable. The separate objection that certain items were not shown to have been used in fabrication turned on factual verification of the record, so that limited issue was remanded for fresh examination by the adjudicating authority.

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Issues: (i) Whether CENVAT credit could be denied merely because the declaration was filed after receipt of the capital goods and because the capital goods were not installed before availing the balance credit. (ii) Whether the denial of credit on the ground that some items could not be used in fabrication of capital goods could be sustained without factual verification.

Issue (i): Whether CENVAT credit could be denied merely because the declaration was filed after receipt of the capital goods and because the capital goods were not installed before availing the balance credit.

Analysis: The requirement of prior installation was not treated as a condition for availing the balance credit. On the declaration aspect, non-filing or late filing by itself was held not to justify denial of credit where receipt of duty-paid capital goods in the factory and their use in manufacture were not in dispute. The lapse was treated as procedural and not sufficient to defeat the substantive benefit.

Conclusion: Denial of CENVAT credit on these grounds was not sustainable, and the assessee succeeded on this issue.

Issue (ii): Whether the denial of credit on the ground that some items could not be used in fabrication of capital goods could be sustained without factual verification.

Analysis: The factual controversy regarding whether the disputed goods were actually machined and used as parts of capital goods required examination of the record and verification of evidence. As the appellate authority had rejected the claim for want of evidence, the matter needed reconsideration by the original adjudicating authority on the factual aspect.

Conclusion: The matter was remanded for factual verification on this limited issue.

Final Conclusion: The assessee obtained relief on the legal objections relating to installation and delayed declaration, while the remaining factual dispute concerning use of certain goods was sent back for fresh examination.

Ratio Decidendi: A procedural irregularity in filing the declaration does not by itself warrant denial of substantive CENVAT credit when receipt of duty-paid inputs or capital goods and their use in manufacture are otherwise established.

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