Modvat credit eligibility on duty-paid inputs upheld despite procedural objections, subject to documentary proof of input duty payment.

Modvat credit on inputs was held admissible once the product was found dutiable, because procedural objections such as prior declaration and account maintenance could not by themselves defeat the substantive entitlement. The finding of alleged misdeclaration did not govern the separate issue of credit eligibility. The claim was, however, made conditional on proof that the inputs were duty-paid, and the matter was remanded for limited verification of supporting documents.

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Issues: Whether the assessee was entitled to Modvat credit on inputs used in the manufacture of the disputed product, and whether the claim could be rejected for alleged misdeclaration and non-compliance with procedural requirements.

Analysis: The product was ultimately held to be dutiable, so the question of Modvat credit arose only after the duty liability was upheld. The procedural objection regarding prior filing of declaration and maintenance of accounts could not defeat the claim at that stage. The finding of misdeclaration was held not to control the separate question of eligibility to credit. The credit was, however, made conditional upon production of documents evidencing duty payment on the inputs used in manufacture.

Conclusion: Modvat credit was held admissible to the assessee, subject to proof of duty-paid inputs, and the matter was remanded to the adjudicating authority for that limited verification.

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