Substantial compliance with Modvat declaration requirements saved credit where the description of magnets was treated as reasonably adequate.

Credit was not to be denied merely because the declared input was described as permanent magnets when the goods were in fact articles intended to become permanent magnets, since the tariff heading itself distinguished the two categories. The declaration requirement under Rule 57G was construed liberally in the early Modvat context, and the surrounding documents and departmental conduct supported a reasonable belief that the declaration was adequate. On that basis, substantial compliance with the declaration requirement was accepted and denial of credit was not warranted.

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Issues: Whether credit was correctly denied on the ground that the input declared as permanent magnets was, in fact, articles intended to become permanent magnets, and whether the declaration requirement under Rule 57G was substantially complied with.

Analysis: The tariff heading itself distinguished permanent magnets from articles intended to become permanent magnets, so the two could not be treated as identical. At the same time, the heading grouped both items together, the declaration was made in the early days of Modvat, and the surrounding documents and departmental conduct showed that the assessee could reasonably have believed that the declaration was adequate. In these circumstances, the procedural requirement of declaration was treated with a liberal approach and the defect was not considered fatal.

Conclusion: The requirements of Rule 57G were held to have been met and the denial of credit was not warranted.

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