Modvat credit not denied for delayed Rule 57G declaration where filing, acknowledgment, and utilisation all followed compliance.

Modvat credit was held not to be denied merely because the Rule 57G declaration was not filed before receipt of inputs, where the credit in the Modvat register was taken only after the declaration was filed and acknowledged and utilisation began only after compliance. The dispute arose in the initial phase of the Modvat scheme, when the prescribed declaration format was notified later, and the reasoning in the assessee's earlier case was applied to those facts. On that basis, receipt of inputs before filing the declaration was not treated as a disqualifying circumstance, and the demand and penalty were set aside.

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Issues: Whether Modvat credit was wrongly denied on the ground that the declaration under Rule 57G had not been filed when the inputs were received and whether credit taken after filing of the declaration could still be sustained.

Analysis: The record showed that the credit in the Modvat register was taken after the declaration was filed and acknowledged, and that utilisation also commenced only after compliance with Rule 57G. The period in dispute related to the initial phase of the Modvat scheme, when the prescribed declaration format itself was notified only later. In these circumstances, the reasoning adopted in the assessee's own earlier case was applied to the present facts, and the receipt of inputs before filing of declaration was not treated as a disqualifying circumstance.

Conclusion: The credit could not be denied on the facts of the case, and the demand and penalty were set aside in favour of the assessee.

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