Modvat credit cannot be denied for want of prior permission where later approval covers the same inputs and products.

Modvat credit could not be denied solely because prior permission under Rule 57F(2) was not obtained before sending declared inputs to a job worker. The inputs and finished products had already been declared, and permission was granted shortly thereafter for the same goods. The rule was treated as requiring permission, but not as imposing prior permission as an absolute substantive condition. The omission was therefore a procedural defect, and the later permission was capable of ratifying the earlier intermediate removal. On that basis, denial of credit was unsustainable and relief was granted to the assessee.

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Issues: Whether Modvat credit could be denied merely because prior permission under Rule 57F(2) was not obtained before sending inputs to the job worker, when the inputs had been duly declared and permission was granted shortly thereafter.

Analysis: The appellant had declared the relevant ingots and billets as inputs under Rule 57G before the relevant period. The later grant of permission under Rule 57F(2) covered the same inputs and finished products. The rule, as it then stood, required permission to be granted and did not insist on prior permission as an absolute condition. In these circumstances, the absence of prior permission was treated as a procedural defect, and the subsequent permission was capable of ratifying the earlier removal of inputs for intermediate processing.

Conclusion: The denial of Modvat credit was unsustainable and the appeal was allowed in favour of the assessee.

Ratio Decidendi: Where a statutory permission requirement is procedural in character and the permission is subsequently granted for the same inputs and products, credit cannot be denied solely for want of prior permission if the substantive conditions for availment are otherwise satisfied.

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