Modvat credit cannot be denied for missing declaration when the final product was believed non-dutiable as waste.

Modvat credit could not be denied solely because no Rule 57G declaration had been filed before clearance of the final product, where the assessee had bona fide believed the recovered octanol was a waste product and therefore not dutiable. Once the department treated the final product as dutiable and accepted credit in principle on the inputs used in its manufacture, the earlier omission to file the declaration did not defeat the credit claim. The prior non-filing was explained by the assessee's belief that the product itself was outside duty, and the credit was rightly allowed.

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Issues: Whether Modvat credit could be denied merely because no declaration under Rule 57G had been filed when the final product had been cleared without payment of duty under the bona fide belief that it was a waste product.

Analysis: The assessee had cleared the goods without payment of duty on the understanding that the recovered octanol was a waste product. Once the department treated the final product as dutiable and extended credit in principle on the inputs used in its manufacture, the prior absence of a declaration under Rule 57G could not defeat the credit claim. The failure to file the declaration earlier was attributable to the belief that the final product itself was not dutiable.

Conclusion: The absence of an earlier declaration under Rule 57G did not bar Modvat credit, and the credit was rightly allowed.

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