Modvat credit cannot be denied for minor input-description errors when duty-paid goods are used in the declared final product.

Modvat credit could not be denied where a Rule 57G declaration substantially covered the relevant chapter and final product, even though the input description and tariff classification were not exact. The operative principle applied was that minor discrepancies in nomenclature or classification do not defeat credit when the duty-paid inputs are actually used in manufacture of the declared final product. A liberal reading, supported by a clarificatory circular and trade notice, was accepted because the broad product classification was correct and the variation arose from trade practice. On that basis, the assessee was entitled to retain the credit.

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Issues: Whether Modvat credit could be denied merely because the declaration under Rule 57G did not precisely describe the inputs or fully match their tariff classification, where the inputs were duty-paid and used in the manufacture of the declared final product.

Analysis: The declaration substantially covered the relevant chapter and the final product, and the discrepancy was only in nomenclature and precise classification of the input. The Court relied on the view that Modvat benefit should not be denied for minor variation in description or classification when the duty-paid inputs are actually used in the manufacture of the declared final product. The board's clarificatory circular and trade notice also supported a liberal approach where the broad product classification was correct and the variation arose from trade practice.

Conclusion: Modvat credit could not be disallowed on the ground of such minor defects in the declaration, and the assessee was entitled to retain the credit.

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