Modvat credit on common inputs upheld where no one-to-one correlation was required and declaration preceded credit availment.

Common inputs used in the manufacture of multiple final products qualified for Modvat credit where the inputs and products were declared under Rule 57G and the assessee maintained a consolidated RG 23A Part II register. Rule 57F(3) did not require one-to-one correlation between each input and each final product for credit utilisation when the inputs were used across dutiable clearances. Credit was also not to be denied for a small disputed amount merely because the register debit entry preceded actual availment, where the relevant declaration was filed before credit was taken. The credit was properly availed and the Revenue's challenge failed.

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Issues: Entitlement to Modvat credit on common inputs used in the manufacture of multiple final products, and whether credit could be denied on the ground that certain inputs were not capable of use in every product or that declaration relating to a part of the credit was filed after debit entry but before actual availment of credit.

Analysis: The inputs and final products were declared under Rule 57G, and the respondents were permitted to maintain a consolidated RG 23A Part II register. The record showed that the common inputs were used across the various final products, which were cleared on payment of duty. In such a situation, Rule 57F(3) did not require one-to-one correlation between specific inputs and specific final products for utilisation of Modvat credit. As regards the small disputed amount, the declaration covering the inputs was filed before the credit was actually taken, even though the debit entry in the register had been made earlier.

Conclusion: The credit was correctly availed and was not liable to be disallowed. The disputed amount of credit was also rightly taken. The Revenue appeal failed.

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