Modvat credit admissibility turned on proven nexus between duty-paid inputs and final goods, defeating procedural objections.

Modvat credit was treated as admissible where the Tribunal found a broad co-relation between duty-paid coils and the sheets on which credit was taken, and the Department failed to disprove that nexus. The factual findings also showed that the weight of the duty-paid coils tallied with the weight of the sheets, supporting the assessee's claim. In those circumstances, alleged non-compliance with Rule 57F(4) of the Central Excise Rules, 1944 did not justify denial of credit, and no substantial question of law arose.

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Issues: Whether Modvat credit was admissible despite alleged non-compliance with Rule 57F(4) of the Central Excise Rules, 1944 and whether the Department had failed to disprove the claimed co-relation between the duty-paid coils and the sheets on which credit was taken.

Analysis: The Tribunal had recorded that the Department attempted to show that the sheets received in the factory did not emanate from duty-paid coils, but it failed to establish that the sheets found in the assessee's premises were made out of non-duty-paid coils. The finding further recorded that the weight of the duty-paid coils tallied with the weight of the sheets and that there was a broad co-relation between them. On those findings, no substantial question of law arose.

Conclusion: Modvat credit was held admissible and the appeal was rejected.

Ratio Decidendi: Where the factual findings establish a broad co-relation between duty-paid inputs and the final goods and the Department fails to disprove that nexus, no substantial question of law arises and credit cannot be denied on a mere allegation of procedural non-compliance.

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