Modvat credit cannot be denied for a wrong tariff heading when the input is correctly described in the declaration.

Modvat credit could not be denied on nickel-magnesium alloy merely because the Rule 57G declaration did not separately name the input or mentioned an incorrect tariff heading. The declaration, read as a whole, sufficiently described the nickel-based input, and the alloy was treated as covered by nickel for tariff purposes under the relevant Section Note. A wrong classification entry did not invalidate an otherwise clear declaration. The denial of credit was therefore unsustainable, and the related demand and recovery did not survive.

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Issues: Whether Modvat credit could be denied on nickel-magnesium alloy merely because the declaration under Rule 57G did not separately mention that input or because the tariff heading/sub-heading stated in the declaration was incorrect.

Analysis: The declaration made in March 1986 described the input in question, and the later declaration in October 1986 also showed the appellant's intention to cover nickel-based inputs. For tariff purposes, nickel-magnesium alloy was treated as covered by nickel in view of Section Note 3 of Section XV of the Central Excise Tariff Act, 1985. The incorrect mention of heading or sub-heading did not defeat the declaration when the description of the input was otherwise clear, and the settled legal position was that a wrong tariff classification is not material if the goods are correctly described in the declaration.

Conclusion: The denial of Modvat credit was unsustainable and the issue was decided in favour of the appellant.

Final Conclusion: The appeal succeeded and the credit-related demand and recovery did not survive.

Ratio Decidendi: A Modvat declaration is not invalidated by an incorrect tariff heading if the input is correctly described and the goods are otherwise covered by the declaration.

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