Modvat credit cannot be denied for missing prior declaration where duty-paid inputs are later verifiable.

Modvat credit could not be denied solely because the assessee had not filed the Rule 57G declaration where the inputs' duty-paid character was later verifiable. The declaration requirement was treated as inapplicable in the circumstances because the assessee had proceeded on the basis that no duty was payable at the relevant time. Credit was allowed subject to verification of the duty-paid nature of the inputs, reflecting the principle that consequential credit should not be refused merely for want of prior procedural compliance when duty liability arises later after rejection of a non-dutiability or exemption claim.

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Issues: Whether Modvat credit could be denied merely because the assessee had not filed the declaration contemplated by Rule 57G when duty on the inputs was paid later and the duty-paid character of the inputs was verifiable.

Analysis: The declaration requirement was treated as inapplicable in the circumstances because the assessee proceeded on the basis that no duty was payable at the relevant time. The impugned order allowed Modvat credit subject to verification of the duty-paid character of the inputs and was found to be consistent with the principle that where duty demand arises later after rejection of a claim of non-dutiability or exemption, the consequential credit benefit should not be denied merely for want of earlier procedural compliance, provided the prescribed procedure and verification requirements are satisfied.

Conclusion: Modvat credit could not be refused solely for absence of prior declaration, and the question was answered against the Department.

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