Modvat credit and substantial compliance under Rule 57G upheld where inputs were used in manufacture and no double benefit was shown.

Modvat credit could not be denied where the inputs were admittedly received in the assessee's factory and used in manufacture, because Rule 57G was substantially complied with despite the absence of the importer's declaration. The court also rejected the apprehension of double benefit, as there was no allegation or material that the importer had claimed, or even attempted to claim, refund of countervailing duty. The circular relied on did not change the result on these facts, so the assessee was entitled to Modvat credit.

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Issues: Whether Modvat credit could be denied for want of a declaration by the importer under Rule 57G of the Central Excise Rules, 1944, and on the apprehension that the importer may also claim refund of countervailing duty.

Analysis: The inputs were admittedly received in the assessee's factory and used in the manufacturing process. On those facts, the requirement under Rule 57G was held to have been substantially complied with. The apprehension of double benefit was found unsupported because there was no allegation or material showing that the importer had claimed, or even attempted to claim, refund of countervailing duty. The circular relied upon did not alter this result in the absence of any actual competing claim by the importer.

Conclusion: Modvat credit could not be denied on the facts of the case, and the assessee was entitled to succeed.

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