Modvat credit depends on specific tariff declarations, with credit limited to inputs actually falling within the declared chapter.

Rule 57G requires a sufficiently specific Modvat declaration to enable verification that inputs are used in or in relation to manufacture of the final product. Where the declaration described inputs broadly as parts, accessories and components but also identified a tariff heading, credit could be confined to inputs genuinely covered by that heading. The authority nevertheless had to extend credit for inputs actually falling within Chapter 90 once it accepted that Chapter 90 was the relevant scope. Modvat credit was therefore limited to declared Chapter 90 inputs, with entitlement available only for inputs within that chapter.

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Issues: Whether Modvat credit could be restricted to inputs covered by the tariff heading declared under Rule 57G when the declaration described the inputs broadly as parts, accessories and components; and whether credit had to be extended to inputs falling under Chapter 90 of the tariff.

Analysis: Rule 57G requires a declaration sufficiently specific to enable the department to verify that the inputs are used in or in relation to manufacture of the final product. A broad description, coupled with a tariff heading, justifies confining credit to inputs genuinely covered by that heading. At the same time, where the appellate authority accepted that credit was confined to Chapter 90 inputs, it ought to have directed extension of credit for those inputs that actually fell within Chapter 90.

Conclusion: Modvat credit was correctly confined to declared Chapter 90 inputs, and the assessee was entitled to credit only for inputs falling within Chapter 90; the order was modified accordingly.

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