MODVAT credit allowed for duty-paid ingots where inputs and final products were covered by the notification, despite declaration defect.

MODVAT credit on duty-paid ingots used to manufacture bars and rods was treated as admissible where both the inputs and final products were covered by the relevant MODVAT notification, subject to verification that the inputs were in fact duty paid. Credit was not denied merely because the assessee had not filed a declaration on the footing of a different notification, if entitlement was otherwise available in law. The duty demand for the relevant period was to be adjusted against the verified credit, with remand for verification and fresh adjustment in accordance with law.

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Issues: Whether MODVAT credit of duty paid on ingots used in the manufacture of bars and rods could be allowed when both the inputs and the final products were specified under the relevant notification and the declaration had not been filed on the footing of entitlement under another notification.

Analysis: The inputs and final products were specified under Notification No. 177/86 issued under Rule 57A of the Central Excise Rules, 1944, and therefore MODVAT credit on duty paid ingots was available, subject to verification of the duty-paid character of the inputs. The absence of a declaration, pursued on the basis of a different notification, was held not to deprive the appellants of the credit otherwise admissible in law. At the same time, the duty demand for the relevant period was not disturbed in the abstract and was directed to be adjusted against the credit available after verification.

Conclusion: MODVAT credit was held admissible, and the matter was sent back for verification and adjustment of the duty demand against such credit.

Final Conclusion: The appeal succeeded to the extent of securing MODVAT credit and consequential adjustment, but the matter was remitted to the adjudicating authority for verification and fresh adjustment in accordance with law.

Ratio Decidendi: Where duty-paid inputs and the final products are covered by the relevant MODVAT notification, credit cannot be denied merely because a declaration was not filed on the basis of a different claimed notification, if the duty-paid character of the inputs is otherwise verifiable.

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