Modvat credit on common inputs may be used against any declared dutiable final product absent a specific restriction.

Modvat credit on a common input used in manufacturing several dutiable final products could be utilised against any declared final product where the inputs were covered by a valid declaration. Rule 57A allows credit on inputs used in or in relation to manufacture, Rule 57F(1) requires only such use for the declared products, and Rule 57F(3)(i) permits utilisation of credit towards duty on any of those products. Rule 57G(3) requires RG 23A maintenance but does not mandate product-wise correlation or quantum-wise apportionment. In the absence of any notification or order restricting credit, denial merely because credit earned on one product exceeded duty on that product was not justified.

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Issues: Whether Modvat credit taken on a common input used in the manufacture of several dutiable final products could be utilised against any of those final products without product-wise co-relation or quantum-wise accountal.

Analysis: Rule 57A permits credit of duty on inputs used in or in relation to the manufacture of final products, and the proviso empowers the Central Government to restrict such credit by notification or order. Rule 57C is inapplicable where the final products are not exempt or chargeable to nil rate. Rule 57F(1) requires only that the inputs be used in or in relation to the manufacture of the declared final products, while Rule 57F(3)(i) allows utilisation of the credit towards payment of duty on any of the final products for which the inputs are intended to be used in accordance with the declaration filed under Rule 57G. Rule 57G(3) contemplates maintenance of RG 23A accounts, but does not prescribe product-wise correlation or quantum-wise apportionment. Since all the final products were dutiable and no notification or order restricting the credit was shown, there was no legal basis to deny utilisation of the credit merely because the credit earned on one product exceeded the duty on that product.

Conclusion: The Revenue's contention was rejected, and the assessee was entitled to utilise the Modvat credit on the common input against any of the declared dutiable final products without product-wise co-relation.

Ratio Decidendi: Where common inputs are covered by a valid declaration and all relevant final products are dutiable, Modvat credit may be utilised against any declared final product unless the credit is specifically restricted by a valid notification or order; product-wise co-relation and quantum-wise accountal are not implied unless the Rules expressly require them.

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