Common inputs under Modvat may cover identical goods used across vehicle models, preserving input credit entitlement.

Under the Modvat scheme, input credit could not be denied merely because an identical input was recorded against one vehicle model and not another. The phrase "common inputs" had to be read in the context of the goods manufactured, and the scheme did not require a strict one-to-one correlation between each input and each final product. A narrow model-specific construction would defeat the object of Modvat credit, especially where credit accumulated on one product line could be used for duty payment on the final product. On that construction, denial of credit was unsustainable and the assessee's appeal succeeded.

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Issues: Whether, under the Modvat scheme, input credit on goods used in the manufacture of different models of motor vehicles could be denied on the ground that the particular input was shown against only one vehicle variety and not the other.

Analysis: The declaration of inputs and the maintenance of records had to be read in the context of the goods manufactured. The phrase "common inputs" could not be given a narrow meaning by splitting identical items into model-specific variants merely because they were used in different vehicles. The scheme did not require a strict one-to-one correlation between each input and each final product, and a restrictive construction would defeat the very object of Modvat credit. The fact that credit accumulated on one product line could still be utilised for duty payment on the final product also negatived the suggested revenue loss.

Conclusion: The credit could not be denied on the ground adopted in the impugned order. The phrase "common inputs" had to be construed with reference to the goods manufactured, and the appeal succeeded in favour of the assessee.

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