Modvat credit on inputs remained available despite omission to declare an intermediate lacquered stage in the declaration.

Credit of duty paid on inputs used to make lacquered tin sheets was admissible despite no specific Modvat declaration of the intermediate lacquered stage, because the final product was declared as electrolytic tin plates or tinned sheets and the assessee had proceeded on the understanding that Modvat benefit applied. Where the assessee did not know at the time of clearance that the product would be dutiable, omission to declare the relevant inputs or intermediate product did not, by itself, defeat credit. The department treated the lacquering as a permitted process, and the input credit claim was therefore sustained.

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Issues: Whether credit of duty paid on unlacquered tin sheets was available for payment of duty on lacquered tin sheets, notwithstanding the absence of a specific declaration of the lacquered sheets as an intermediate product under the Modvat declaration.

Analysis: The declaration described the final product as electrolytic tin plates or tinned sheets, and the assessee had proceeded on the basis that Modvat benefit was available for the lacquered sheets. The lacquering was also treated by the Department as being done under the permitted process. The governing principle applied was that where, at the time of clearance, the assessee did not know that the product would be dutiable and therefore omitted to declare the relevant inputs or intermediate stage, credit on duty paid inputs could still be allowed despite the omission.

Conclusion: Credit of duty paid on the inputs was admissible, and the department's appeal failed.

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