Modvat credit cannot be denied for tariff-heading differences where input descriptions are correct and identifiable.

Modvat credit could not be denied merely because some input declarations and gate passes reflected different tariff sub-headings, where the inputs were correctly described and identifiable. Rule 57G required a proper declaration, but the decisive test was whether the description of the inputs was accurate; variation in classification by suppliers or excise officers did not by itself render the declaration false or incorrect. As the declared descriptions matched the goods received and there was no dispute about the final products, the credit was allowable and the related demand and penalty could not be sustained.

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Issues: Whether Modvat credit could be denied and recovered merely because some input declarations and gate passes showed different tariff sub-headings, when the description of the inputs was correctly furnished and there was no dispute about the final products.

Analysis: Rule 57G required a proper declaration for availing Modvat credit, but the decisive consideration was whether the input materials were correctly described. A mere variation in tariff classification in some gate passes did not make the declaration false or incorrect where the inputs were identifiable and there was no variation in their description. The classification adopted by input suppliers or excise officers was not controlling for the recipient of inputs, and the record showed that the declared descriptions matched the goods received.

Conclusion: The denial of Modvat credit was unsustainable; the assessee was entitled to the credit and the consequential demand and penalty could not stand.

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