Modvat credit cannot be denied solely because input and final product are separately manufactured or separately declared.

Modvat credit could not be denied merely because vegetable non-essential oil and soap were manufactured as separate processes and covered by separate declarations. The decisive factor was that vegetable oil was used as an input in the manufacture of soap, so the absence of a continuous process between the two products did not defeat credit eligibility. Separate manufacture or separate filing under Rule 57G(1) was not, by itself, a valid ground to refuse the benefit, and credit remained available under the applicable Modvat framework.

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Issues: Whether Modvat credit could be denied on the ground that vegetable non-essential oil and soap were treated as separate manufacturing processes and separate declarations had been filed.

Analysis: The claim for credit was examined with reference to the declarations filed under Rule 57G(1) and the contention based on Rule 57D(2). The decisive consideration was that vegetable oil was used as an input in the manufacture of soap and that the fact of independent manufacture of vegetable oil and soap did not by itself justify denial of credit. The requirement of a continuous process between the two products was rejected.

Conclusion: Modvat credit could not be denied merely because vegetable oil and soap were manufactured independently or covered by separate declarations. The assessee was entitled to the credit.

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