Procedural delay in Modvat declaration did not defeat credit where capital goods were received and duty payment was shown.

Rule 57-T(3) of the Central Excise Rules, 1944 was treated as procedural rather than mandatory for availing Modvat credit. The court held that credit could not be denied merely because the declaration was filed late where the capital goods had been received in the factory and duty payment was evidenced. The scheme was viewed as granting relief on the duty element already borne, and the belated declaration could still be considered on sufficient cause being shown under the rule. Procedural delay in filing the declaration did not defeat the substantive entitlement once the essential conditions were satisfied.

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Issues: Whether Rule 57-T(3) of the Central Excise Rules, 1944 was mandatory or procedural in nature, and whether Modvat credit could be denied for delayed filing of the declaration when the capital goods were received in the factory and duty-paid.

Analysis: The declaration requirement under Rule 57-T was treated as part of the procedure for availing Modvat credit. The credit scheme was described as a duty-collecting mechanism granting relief on the duty element borne on inputs, and the court found that the essential conditions were receipt of the capital goods in the factory and evidence of duty payment. Where a declaration was filed belatedly, sub-rule (3) itself permitted consideration on sufficient cause being shown. The court held that a procedural lapse in timing could not defeat the credit when the substantive conditions were satisfied, and relied on the principle that procedural provisions for availing Modvat credit do not take away the underlying entitlement.

Conclusion: Rule 57-T(3) was held to be procedural, not mandatory, and Modvat credit could not be denied merely because the declaration was filed late. The question of law was answered in favour of the assessee.

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