Modvat credit on wired chassis used in dutiable television sets was held admissible despite procedural objections.

Modvat credit on wired chassis manufactured in one unit and cleared to another integrated unit for use in dutiable television sets was treated as admissible. The denial based on the assessee's not following the prescribed procedure was found unsustainable because the departmental authorities were aware of the inter-unit transfers and the assessee had sought recognition of the Modvat position by correspondence. The benefit already available for chassis used in dutiable final products was directed to be extended, and the admissible amount was to be adjusted against the demand.

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Issues: (i) Whether Modvat credit was admissible on wired chassis manufactured in one unit and used in the manufacture of dutiable television sets in another unit.

Analysis: The units were operated in an integrated manner, with wired chassis cleared from Unit No. I to Unit No. II for use in manufacture of final products. The record showed that the departmental authorities were aware of such transfers and that the assessee had, by correspondence, sought recognition of the Modvat position. The denial of credit on the ground that the assessee had not chosen the procedure was found unsustainable. The benefit already available in respect of chassis used in dutiable final products was directed to be extended, and the amount so admissible was to be adjusted against the demand.

Conclusion: Modvat credit on wired chassis used in dutiable television sets was held admissible and the assessee succeeded to that extent.

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