MODVAT credit can be used for declared final products of the same broad class without one-to-one input-output correlation.

Rule 57F(3) under the MODVAT scheme allows credit on declared inputs to be used for payment of duty on any declared final products in or in relation to the manufacture of which those inputs are intended to be used. The provision does not require a one-to-one correlation between each input and each output. Read with Rule 57G and its proviso, the scheme supports utilisation within the same broad class of final products. Where both inputs and outputs are declared and the credit is applied against that class, the broader interpretation is accepted and the objection based on strict matching is rejected.

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Issues: Whether credit taken under the MODVAT scheme in respect of declared inputs could be utilised towards payment of duty on declared final products of the same broad class, without insisting on a one-to-one correlation between each input and each output.

Analysis: Rule 57F(3) permits credit of duty allowed on any inputs to be utilised towards payment of duty on any of the final products in or in relation to the manufacture of which such inputs are intended to be used under the declaration filed in Rule 57G. The rule does not provide for a one-to-one correlation between inputs and final products. The proviso also indicates that utilisation is linked to similar final products, supporting a broader class-based reading of the scheme. Since the inputs and outputs were both declared and the credit was used with reference to the same broad class of final products, the assessee's interpretation was accepted.

Conclusion: Credit under Rule 57F(3) could be utilised against the declared final products of the same broad class, and the objection based on one-to-one correlation was rejected in favour of the assessee.

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