Modvat declaration alone does not justify higher duty where no credit was actually taken; later demand expansion fails

Filing a Modvat declaration under Rule 57G did not, by itself, establish that Modvat credit had been availed, so the higher Modvat-linked duty rate could not be demanded where the record showed no credit was actually taken during the relevant period. A later corrigendum that enlarged the demand and extended the period was also unsustainable, particularly because it was issued after the matter had already been heard in appeal. The differential duty demand was therefore not maintainable, and the corrigendum could not be upheld.

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Issues: Whether differential duty at the higher Modvat-linked rate could be demanded merely because a Modvat declaration had been filed, when no Modvat credit was actually availed, and whether the demand could be enlarged through a later corrigendum.

Analysis: The applicable notification prescribed different duty rates depending on whether the assessee was availing Modvat credit. Filing of a declaration under Rule 57G did not by itself mean that Modvat credit had been taken. The record showed that no credit was availed during the relevant months, so the higher rate could not be applied. The later corrigendum enhancing the demand and extending the period was treated as unlawful, especially as it was issued after the matter had already been heard in appeal.

Conclusion: The demand for differential duty was not sustainable and the correction by corrigendum could not be upheld.

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