Modvat credit cannot be denied for a broadly worded declaration when early scheme uncertainty made the defect procedural only.

Modvat credit could not be denied merely because the declaration described the inputs only generally as "machinery parts" when the declaration was filed in the early period of the scheme and the inputs were otherwise undisputedly used in manufacture. The uncertainty then prevailing in trade and administration over the level of detail required, together with the Board's later recognition that credit should not be disallowed in such early cases, meant the omission was treated as a curable procedural defect. Credit was therefore allowed and the disallowance set aside with consequential relief.

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Issues: Whether Modvat credit could be denied for want of a more specific declaration of inputs when the declaration was filed in the early period of the Modvat scheme and the goods were admittedly used as inputs in the manufacture of the final products.

Analysis: The declaration, though described only as "machinery parts", was filed in March 1986 when the Modvat procedure had just come into force. The record showed that there was considerable uncertainty in trade and administration regarding the particulars required in the declaration. The Board itself had later recognised this lack of clarity and directed that credit should not be disallowed in such early cases. In these circumstances, the omission to give a more specific description was treated as a curable procedural defect and not a ground to deny credit.

Conclusion: Modvat credit was rightly taken and could not be denied on the ground of an insufficiently specific declaration.

Final Conclusion: The assessee was held entitled to the credit claimed, and the disallowance was set aside with consequential relief.

Ratio Decidendi: Where a declaration under a newly introduced Modvat scheme was filed during the initial period of uncertainty and the inputs were otherwise undisputedly eligible, credit cannot be denied merely for lack of detailed specificity in the declaration.

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