Declared inputs and accepted classification list supported Modvat credit on duty-paid miniature bulb clearances despite captive use.

Modvat credit was held admissible on inputs used to manufacture miniature bulbs cleared for home consumption on payment of duty, where a separate Rule 57G declaration and classification list had been filed for the bulbs and accepted by the department. The denial of credit was unsustainable because the record showed that the inputs were duly declared, the bulbs were specifically covered in the separate classification list, and no objection had been raised to credit on inputs used for captive consumption. Credit could not be refused merely because torches were also mentioned as another final product in the initial declaration.

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Issues: Whether Modvat credit was admissible on inputs used in the manufacture of miniature bulbs cleared for home consumption on payment of duty, where the assessee had filed a separate declaration and classification list for miniature bulbs in addition to torches.

Analysis: The assessee had filed a separate declaration under Rule 57G for miniature bulbs, declaring the 11 inputs used in their manufacture. A separate classification list for miniature bulbs was also filed, and it specifically stated that any clearance of miniature bulbs for sale would be made on payment of excise duty. The denial of credit rested on the view that only torches had been declared as the final product, but the record showed that the department had accepted the separate declaration for miniature bulbs and had raised no objection to credit on inputs used for bulbs captively consumed in torches. In that situation, there was no basis to deny credit merely because some miniature bulbs were also cleared for home consumption on duty payment.

Conclusion: Modvat credit on the inputs used in miniature bulbs cleared for home consumption was admissible and the denial of credit was not sustainable.

Final Conclusion: The order denying Modvat credit was set aside and the assessee succeeded in the appeal.

Ratio Decidendi: Where a separate declaration and classification list for a product have been filed and accepted, Modvat credit on duly declared inputs cannot be denied for duty-paid clearances of that product merely because the product was also used captively or because another final product was mentioned in the initial declaration.

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