Modvat credit cannot be refused for minor input-description mismatch where duty-paid goods were received and used in manufacture.

Modvat credit should not be denied on a mere mismatch between the description or tariff classification in the Rule 57G declaration and the duty-paying documents where the inputs were duty-paid, received, and used in manufacture. The declaration had already served its notice function and the Department had acted on it for years. In the absence of mala fides, non-payment of duty, or any substantive contravention, the scheme could not be applied on a hyper-technical or procedural basis. Minor variations in description did not justify denying credit, and the credit remained allowable.

---

---

Issues: Whether Modvat credit could be denied merely because the description and tariff classification of inputs in the declaration under Rule 57G differed from the descriptions shown in the duty-paying documents, though the inputs were duty-paid, received, and used in the manufacture of the final product.

Analysis: A declaration had been filed and acted upon by the Department for several years. The discrepancy related only to description and classification, while the inputs admittedly fell within Chapter 72 and were used as inputs for the final product. Modvat is a beneficial scheme, and credit should not be denied on hyper-technical or hyper-procedural grounds where there is no allegation of mala fides, non-payment of duty, or non-use of the inputs in manufacture. The filing of the declaration served the purpose of putting the Department on notice, and denial of credit for minor variation in description would amount to penalising the assessee without fault.

Conclusion: Denial of Modvat credit on the ground of mismatch in description and classification was unjustified, and the credit was allowable to the assessee.

Ratio Decidendi: Modvat credit cannot be denied for a minor mismatch in description or classification of inputs where the declaration has substantially served its notice function, the inputs are duty-paid and used in manufacture, and no mala fide or substantive contravention is shown.

---