MODVAT credit cannot be denied for a technical Rule 57H lapse when declaration acknowledgment preceded credit and inputs were otherwise eligible.

MODVAT credit on eligible inputs was treated as maintainable where the manufacturer filed the declaration under Rule 57G, obtained the dated acknowledgement, and took credit only thereafter. Rule 57H, which governs inputs received immediately before the dated acknowledgement and requires Assistant Collector permission, was treated as procedural in this context; failure to seek that permission was regarded as a technical lapse because the credit was not taken on receipt of the inputs and the substantive MODVAT conditions were satisfied. The credit, therefore, was not to be denied on that ground.

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Issues: Whether MODVAT credit on inputs received before the dated acknowledgement of the declaration could be denied for want of permission under Rule 57H of the Central Excise Rules.

Analysis: Rule 57G permits credit after the manufacturer files the declaration and obtains the dated acknowledgement. The credit in question was taken only after such acknowledgement, and the inputs and final products were eligible under the MODVAT scheme. Rule 57H applies to inputs received immediately before the dated acknowledgement and empowers the Assistant Collector to allow credit, but the omission to seek that permission was treated as only a technical lapse where the credit was not taken on receipt of the inputs and the substantive conditions were otherwise satisfied.

Conclusion: The credit was not liable to be denied, and the Revenue's challenge failed.

Ratio Decidendi: MODVAT credit cannot be denied on a mere technical non-compliance with the permission requirement under Rule 57H when the manufacturer has obtained the dated acknowledgement under Rule 57G before taking credit and the inputs are otherwise eligible.

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