Modvat declaration compliance was satisfied by department-approved input disclosure, so credit denial for HDPE granules was unsustainable.

Modvat credit for HDPE granules could not be denied merely because the inputs were not specifically listed in the Rule 57G declaration, where the assessee had later sought and obtained permission under Rule 57F(2) for the same inputs to be sent to a job worker. The contemporaneous application brought the input to the department's notice, and the department's acceptance of that request showed that the input was treated as eligible for use in relation to the notified final product. On that basis, the declaration requirement was treated as substantially complied with, and denial of credit was not sustainable.

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Issues: Whether Modvat credit could be denied for HDPE granules on the ground that they were not specifically declared in the Rule 57G declaration, when the assessee had subsequently sought and obtained permission under Rule 57F(2) in relation to the same inputs.

Analysis: Filing of a declaration under Rule 57G is mandatory under the Modvat scheme, as it informs the department about the inputs proposed to be used in the manufacture of the specified final product. However, the assessee had also filed an application under Rule 57F(2) seeking permission to send the very same HDPE granules to a job worker for processing, and the department granted that permission. By that application, the assessee had brought the input on record before the authorities, who accepted it as an eligible input and permitted its use in relation to the notified final product. In these circumstances, the authorities had sufficient notice of the input and the declaration requirement was treated as effectively met.

Conclusion: The assessee was entitled to Modvat credit and the denial was not sustainable.

Ratio Decidendi: Where the department is made aware of the relevant input through a contemporaneous application accepted under the Modvat rules, the requirement of declaration may be treated as satisfied by substantial compliance.

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