Modvat credit cannot be denied for delayed declaration alone where substantive use and duty payment are otherwise satisfied.

Modvat credit on capital goods could not be denied merely because the declaration under Rule 57T was filed late or the related intimation was delayed. The 1999 amendment and accompanying circular treated such procedural lapses as non-fatal where the Assistant Commissioner was satisfied that duty had been paid and the capital goods were actually used, or intended to be used, in manufacture. As the only basis for disallowance was the belated declaration and no substantive defect was established, the procedural default did not justify denial of credit, and the assessee succeeded.

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Issues: Whether Modvat credit on capital goods could be denied solely because the declaration under Rule 57T of the Central Excise Rules, 1944 was filed belatedly and the related intimation requirement was not complied with in time.

Analysis: The appeal turned on the effect of the 1999 amendment and the accompanying circular, which provided that credit should not be denied for minor procedural lapses such as defects or delay in filing the declaration, so long as the Assistant Commissioner was satisfied that duty had been paid and the capital goods were actually used or were intended to be used in manufacture. The Tribunal had found that the only basis for denial was the delayed filing of the Modvat declaration and that no other substantive ground for disallowance was established. On that footing, the procedural default was held not to justify denial of credit.

Conclusion: Credit could not be denied merely for belated filing of the declaration where the substantive requirements were otherwise satisfied. The finding was in favour of the assessee and against the Revenue.

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