Modvat credit cannot be denied for supplier misdescription when the recipient proves actual receipt and use of the declared inputs.

Modvat credit was admissible where the recipient established through sale orders, delivery challans, invoices and the manufacturer's certificate that the goods actually received were angles as declared, despite gate passes describing them as black steel scrap. The discrepancy was treated as a classification error at the supplier's end, and the fact that the goods were received and used in manufacture supported credit. Denial of credit to the recipient was not justified on the ground of non-declaration of scrap as an input; any correction had to be pursued under Rule 57E at the supplier's end. The contrary precedent was distinguished on facts.

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Issues: Whether Modvat credit was admissible where the inputs declared as angles were received under gate passes describing them as black steel scrap, and whether the Department could deny credit on the ground of non-declaration of scrap as an input.

Analysis: The inputs were found, on the basis of the sale order, delivery challan, invoices and the manufacturer's certificate, to be only angles as declared by the assessee. The discrepancy was treated as a matter of classification at the supplier's end. Since the goods actually received were the declared inputs and were used in manufacture, the proper course for any correction lay under Rule 57E of the Central Excise Rules, 1944, rather than denial of credit to the recipient. The cited precedent was distinguished on facts.

Conclusion: Modvat credit was rightly allowed to the assessee and the Department's challenge failed.

Ratio Decidendi: Where the recipient establishes by reliable material that the goods actually received correspond to the declared inputs, a misdescription in the supplier's documents does not by itself disentitle Modvat credit; any correction must be pursued at the supplier's end.

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