Modvat credit cannot be denied solely for differing chapter headings when the input description and use are accepted.

Modvat credit could not be denied merely because the chapter heading in the supplier's gate passes differed from the heading declared by the assessee, where the input was identified as the same hydraulic powerpack and its use in the finished product was accepted. The department had accepted the declaration filed for credit and raised no objection until the show cause notice. In these circumstances, the difference in tariff classification alone, without a proper examination of the material and the classification issue, was held insufficient to refuse credit, and the assessee was entitled to succeed.

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Issues: Whether Modvat credit could be denied on the ground that the chapter heading shown in the supplier's gate passes differed from the chapter heading declared by the assessee, even though the description of the input and its use in the finished product were accepted.

Analysis: The declaration filed for availing Modvat credit was accepted by the department, and the input hydraulic powerpack was described in the declaration and in the gate passes. The denial rested only on the tariff classification shown in the supplier's documents. The record indicated that the declared input corresponded to the same goods used in the assessee's machinery, and the department had not objected to the declaration until the show cause notice was issued. In these circumstances, the mere difference in chapter heading, without a proper examination of the material and the classification issue, was not a sufficient ground to refuse credit.

Conclusion: Modvat credit could not be denied on the stated ground, and the assessee was entitled to succeed.

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