Substantive Modvat credit cannot be denied for a revised stock declaration where duty-paid fabrics and eligibility are established.

Modvat credit on deemed stock of fabrics could not be denied merely because the assessee filed a revised stock declaration. The Tribunal found that the factual record showed the fabrics were available on the relevant date and that the revised declaration did not, by itself, defeat entitlement to credit. It applied the principle that substantive credit benefits cannot be refused on a purely procedural or technical lapse when the duty-paid character of the goods and stock eligibility are established. Credit was therefore allowed and the denial was held unjustified.

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Issues: Whether Modvat credit could be denied solely because the assessee filed a revised declaration of stock, and whether credit was admissible when the stock of fabrics was found to be available as on the relevant date.

Analysis: The dispute concerned deemed credit on stock of fabrics held on 31-3-2003. The record showed that the appellant had initially declared the stock and later filed a revised declaration. The earlier rejection proceeded on a technical view that only the first declaration could be acted upon. The Tribunal held that the factual position showed the appellant was in possession of the stock, and the revised declaration by itself was no basis to deny credit. It also accepted that substantive credit benefit could not be refused merely on procedural or technical lapses, and that the appellant was entitled to credit on duty-paid goods.

Conclusion: The denial of Modvat credit was unjustified and the issue was decided in favour of the assessee.

Ratio Decidendi: Substantive credit cannot be denied merely because of a procedural irregularity or a revised declaration when the underlying stock and duty-paid eligibility are established.

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