Modvat credit for capital goods cannot be denied for delayed declaration when the lapse is only procedural.

Modvat credit on capital goods should not be denied merely because the Rule 57T declaration was filed after the condonable period when the only lapse was procedural. The capital goods were received while the final product was exempt, but credit became relevant once the product became dutiable and the machines remained uninstalled. Rule 57T(13), as inserted by Notification No. 7/99-C.E. (N.T.), and the Board circular supported a liberal approach, and prior Tribunal rulings treated late declaration filing as insufficient by itself to defeat credit. Credit was therefore admissible despite the delayed declaration.

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Issues: Whether Modvat credit on capital goods could be denied merely because the declaration under Rule 57T was filed after the condonable period, where the goods were received when the final product was exempt but were still uninstalled when the product became dutiable.

Analysis: The declaration was admittedly filed, and the only lapse was late filing. The goods had been received earlier, but the assessee became entitled to credit only when tea became dutiable and the machines remained uninstalled. Rule 57T(13), as inserted by Notification No. 7/99-C.E. (N.T.), together with the Board's circular, indicated that credit should not be denied for minor procedural lapses. The earlier Tribunal decisions relied on this approach and held that late filing of declaration, by itself, was not a sufficient ground to deny credit.

Conclusion: The late filing of the declaration did not justify denial of Modvat credit, and the credit was admissible in favour of the assessee.

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