Modvat credit on intermediate products and later-paid duty inputs remained admissible despite declaration objections and timing concerns.

Modvat credit could not be denied merely because no earlier declaration was filed for an intermediate product manufactured in the assessee's own premises when duty had ultimately been paid on that product and the inputs were used in the final product; the substantive credit benefit remained admissible. Later payment of duty on the inputs also did not bar credit, since the materials had been consumed in manufacture and Tribunal precedent supported allowance of notional credit at a later stage. On both issues, the impugned order was sustained and the revenue appeals failed.

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Issues: (i) Whether Modvat credit could be denied for non-filing of declaration in respect of the intermediate product used in the manufacture of the final product. (ii) Whether notional credit was admissible when the duty on the input was paid at a later date.

Issue (i): Whether Modvat credit could be denied for non-filing of declaration in respect of the intermediate product used in the manufacture of the final product.

Analysis: The duty had been paid on behalf of the job workers, the intermediate product was manufactured in the assessee's premises, and the duty on that product was paid much later because the job workers were not traceable. On these facts, there was no occasion to insist upon an earlier declaration for the intermediate product, and the substantive benefit could not be denied when the inputs had been used in the manufacture of the final product.

Conclusion: The declaration objection was rejected and credit was held admissible in favour of the assessee.

Issue (ii): Whether notional credit was admissible when the duty on the input was paid at a later date.

Analysis: The later payment of duty on the relevant inputs did not disentitle the assessee from credit, as the material had been used in the manufacture of the final product and the cited Tribunal decisions supported allowance of higher notional credit at a later stage.

Conclusion: Notional credit was held permissible in favour of the assessee.

Final Conclusion: The impugned order was sustained on both issues and the revenue appeals failed.

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