MODVAT credit required prior declaration before availing input credit; later claim for cotton seed oil was rejected.

MODVAT credit on cotton seed oil was unavailable where the manufacturer had not filed the required declaration and obtained departmental acknowledgement before taking credit. The notification and rules treated that declaration as a condition precedent, so the scheme operated only prospectively after compliance. As the input had been used before the procedural requirement was met, the later claim to credit was rejected and the assessee's contention was not accepted.

---

---

Issues: Whether credit on cotton seed oil could be taken when the declaration required under the relevant MODVAT procedure had not been filed before availing the credit.

Analysis: The credit scheme under the notification and the relevant rules required the manufacturer to file a declaration indicating the inputs intended to be used and to obtain acknowledgement from the department before taking credit. The filing of the declaration was treated as a condition precedent, and the scheme was construed as operating prospectively after compliance with that procedural requirement. On that construction, prior use of the input without the requisite declaration did not entitle the manufacturer to avail credit later.

Conclusion: The claim for credit was rejected and the assessee's contention was not accepted.

---