Mandatory declaration for Modvat credit on stock-in-hand cannot be bypassed by condonation of delayed filing under another rule.

Modvat credit on inputs already lying in stock when credit became admissible required compliance with Rule 57H(1B). The mandatory declaration under that rule was treated as a separate notice requirement to enable departmental verification of stock and its use. Condonation of delay in filing the Rule 57G declaration did not automatically extend to the distinct Rule 57H(1B) requirement, because the earlier correspondence covered only the delayed Rule 57G filing and not the stock in balance. Credit was therefore denied for non-compliance with Rule 57H(1B).

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Issues: Whether Modvat credit on inputs lying in stock on the date of admissibility could be availed without filing the declaration under Rule 57H(1B) of the Central Excise Rules, and whether condonation of delay in filing the declaration under Rule 57G covered the omission.

Analysis: The claim related to credit on HDPE sacks lying in stock when Modvat became admissible. The correspondence relied upon by the assessee sought condonation only for the delay in filing the declaration under Rule 57G and did not specifically cover the stock lying in balance. The requirement of filing a declaration under Rule 57H(1B) was treated as mandatory, since the rule serves the purpose of putting the Department on notice so that stock and its use can be verified. Condonation under Rule 57G(5) was held not to extend automatically to the separate requirement under Rule 57H(1B).

Conclusion: The assessee was not entitled to the disputed Modvat credit for want of compliance with Rule 57H(1B); the Revenue succeeded.

Ratio Decidendi: A declaration under Rule 57H(1B) is a mandatory condition for availing Modvat credit on stock lying at the relevant time, and condonation of delay in filing the Rule 57G declaration does not dispense with that separate requirement.

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