Modvat credit cannot be denied for minor classification mismatch when declared inputs, receipt, and use are otherwise established.

Modvat credit cannot be denied merely because the duty-paying document carries a minor mismatch in description or six-digit sub-heading classification, where the broad description is covered by the declaration and receipt and use of the inputs are otherwise established. Here, CRGO electrical steel sheets, coils, strips, waste and scrap were declared, and defective CRGO sheets and scrap were received under a different sub-heading, but the Tribunal treated the variation as immaterial because the goods fell within the declared scope and their utilisation was undisputed. The denial of credit was therefore held unsustainable, and credit with consequential relief was allowed.

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Issues: Whether Modvat credit could be denied merely because the description or sub-classification of the inputs in the duty-paying document did not exactly tally with the declaration, when the goods received and their use were otherwise established.

Analysis: The declaration covered CRGO electrical steel sheets, coils, strips and waste and scrap of steel and other alloy steel. The documents showed defective CRGO electrical steel sheets in coils and scrap under a different sub-heading, but the broad description remained within the scope of the declaration. The Tribunal also noted that receipt and utilization of the goods were not disputed. Relying on the principle that a minor variation in sub-heading classification at the six-digit level is not sufficient to deny credit, and on the Board circular discouraging denial of credit for such minor classification differences, the impugned denial was found unsustainable.

Conclusion: Modvat credit could not be denied on the basis of the minor discrepancy in description or classification, and the assessee was entitled to the credit and consequential relief.

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